Business

Nigerian Airlines Spend over N10bn Annually on Taxes

Published

8 years ago

February 17, 2017

Nigerian Airlines Spend over N10bn Annually on Taxes

Nigerian airlines pay over N10 billion on taxes annually, according to recent estimates by airline Operators of Nigeria (AON). The AON said the huge taxes undermine profitability and threaten the ability of the airlines to maintain their aircraft overseas.

These taxes are paid by commercial airlines in schedule services, charter airlines and companies that provide services to oil and gas companies, including Bristow, Caverton, Aero and others

The Chairman of AON, Captain Nogie Meggison noted that the taxes levied on airlines seem to indicate that government and its agencies do not want air transport to thrive in Nigeria adding this explained why domestic carriers have very short life span of average of 10 years.

The operators lamented that with such huge taxes, it has become very challenging for them to source funds and ferry their aircraft overseas for C-check and other checks, which could cost as much as $2 million.

The operators therefore urged the federal government to review these charges downwards as a kind of incentive to ensure airlines operate profitably, considering the pivotal role they play in Nigeria’s economy.

AON said due to the huge taxes airlines pay, in the last 25 years about 27 aircraft had gone under.

The operators said these taxes are stifling their operations and government’s seeming indifference or inability to take action indicates they don’t care if all the airlines go under, even as they noted that with fair commitment government could ensure that aviation fuel is produced locally and piped directly to the airports.

They also stressed the need to have Maintenance, Repair and Overhaul (MRO) facilities in NIgeria, which would not only save airlines foreign exchange but would also earn the country huge revenue in dollars.

“Domestic airlines, on the average, pay about 35 percent to 40 percent of a ticket cost as taxes and charges that come under the guise of statutory levies in addition to other charges, Meggison said.

He explained that these taxes and charges amount to double taxation such that any incentive seemingly provided by the government to airlines is taken back by the agencies.

Megisson said the Nigerian Airspace Management Agency (NAMA) charges domestic airlines different kinds of navigational charges, which they should ordinarily be exempted from in line with global best practices, except Nigeria.

“The implemented charges range from Terminal Navigational charges to enroute navigation charges, Over-flight charges, clearance charges, and extension charges. Even foreign airlines don’t pay enroute charges or extension charges, which the local airlines are forced to pay.

In spite of all these charges, NAMA still gets 23 percent taken from NCAA 5 percent Ticket Sales Charge (TSC) account. Even with all these charges, many of the airports in the country do not have runway lights and navigational landing aids. This means such airports are only open between 7am and 6pm daily. To this end, airlines can’t fully utilise their airplanes for 24-hours operations. No airplane or factory machine can be profitable only from 7am to 6pm daylight operations. Airplanes and factory machines are supposed to operate for 24-hours.

He said airlines also sometimes have to pay arbitrary extension fees or cancel a flight entirely with the attendant burden and inconvenience due to no fault of theirs.

“The open ended 5 percent TSC is to say the least ambiguous and open to debate and manipulations. Ticket prices differ from one airline to the other, hence it precludes that different airlines are charged varying amounts for the same service. It also implies that an airline is being charged different amounts at different times for the same service since prices are not static. Rather than a flat 5 percent of ticket cost, the TSC should be a fixed charge like standard global practice of N1000 per ticket,” Captain Meggison said.

He remarked that the existing Nigerian VAT Law states that all forms of commercial transportation are exempted from VAT. Only Nigerian carriers are subject to pay VAT.

“Air transportation in Nigeria is subjected to 5 percent VAT contrary to the law, road, maritime and rail transportation don’t pay VAT. Even foreign airlines operating in Nigeria don’t pay VAT,” Meggison noted.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Business

Glo-Djigbé Industrial Zone (GDIZ) is Exporting its first ‘Made in Benin’ garments for the American brand U.S. Polo Assn.

Published

7 hours ago

September 12, 2024

Samed Olukoya

Glo-Djigbé Industrial Zone (GDIZ) is proud to announce the first export of ‘Made in Benin’ ready-to-wear clothing for the prestigious American brand, U.S. POLO ASSN..

A world-renowned brand, U.S. POLO ASSN. offers a wide range of clothing, accessories, travel goods, watches and shoes, available in over 130 countries.

This first shipment represents a significant step forward in the integration of GDIZ into the global supply chains of the ready-to-wear sector. The collaboration, which is expected to generate volumes of more than one million pieces over the next few years, is being carried out in partnership with INCOM S.P.A., which holds the licence for U.S. Polo Assn. on the European market. All garments shipped from GDIZ are destined for the European market via INCOM S.P.A.

Aimed at the Italian market, this first shipment includes a range of high-quality garments designed to U.S. POLO’s exacting standards, including:

Hooded sweatshirts ;
Polos;
T-shirts.

This partnership with U.S. POLO ASSN. follows several other shipments already made for international brands such as the American brand The Children’s Place (TCP) and the French brand KIABI. The confidence shown by these international brands has strengthened GDIZ’s position as a key player in textile production in Africa.

Mr Létondji Beheton, Managing Director of the Société d’Investissement et de Promotion de l’Industrie (SIPI-Benin), expressed his enthusiasm at this important milestone: ‘This first export of “Made in Benin” clothing for U.S. Polo Assn. is not only a source of pride for GDIZ, but also for Benin as a whole. It is a testament to our growing capacity to produce high-quality textiles that meet international standards. We are delighted to see Benin take a significant step forward in the global ready-to-wear industry, highlighting our commitment to excellence and sustainable development’.

Francesco Gozzini, Production Director of INCOM Italy, underlined the importance of this partnership: ‘We are honoured to be working with Glo-Djigbé Industrial Zone (GDIZ) on this significant export of garments for the U.S. Polo Assn brand. This partnership is a testament to the quality and dedication present in Benin’s textile industry, which fits perfectly with our commitment to offer excellence in every product we offer to the European market. The craftsmanship and attention to detail in these garments reflect the high standards we maintain at INCOM. We look forward to continuing this fruitful collaboration and expanding our offering with ‘Made in Benin’ garments’.

Merger and Acquisition

FBN Holdings Clarifies Merchant Banking Divestment, Retains Other Subsidiaries

Published

1 day ago

September 11, 2024

Samed Olukoya

FBN Holdings has sought to clarify the recent divestment from its Merchant Banking business.

According to the lender, all its businesses and entities apart from the Merchant Banking business are not included in the divestment deal.

It said, “We wish to clarify that all other entities and businesses listed below are not included in the divestment, and they remain subsidiaries of FBNH and are well integrated into the Group’s strategic focus.”

The subsidiaries are FBNQuest Capital Limited, FBNQuest Asset Management Limited, FBNQuest Trustees Limited, FBNQuest Funds Limited, and FBNQuest Securities Limited.

“We reiterate that the divestment pertains solely to FBNQuest Merchant Bank Limited, with no impact on the continued operations or strategic positioning of our other subsidiaries within the Group,” the bank stated in a release signed by Adewale L.O. Arogundade, Acting Company Secretary.

Business

Border Trade Plummets 80% as Naira Devaluation Hits Hard

Published

2 days ago

September 10, 2024

Samed Olukoya

Business activities at Nigerian borders have dropped by 80 percent due to the depreciating Nigerian currency.

Licensed customs agents at the borders said the plunge in the Naira’s exchange rate to the CFA franc is the reason for the declining business activities at the nation’s borders.

In the last three years, the Nigerian Naira has dropped from N300 for 1,000 CFA francs to N2,660 for 1,000 CFA francs.

According to Ogonnanya Godson, Vice Chairman of the National Association of Government Approved Freight Forwarders, Seme Chapter, business activities at the border began declining in 2021.

“The Cotonou CFA franc is now N2,660 for 1,000 CFA francs. It started increasing from N300 for 1,000 CFA francs three years ago until it reached its current level, which is affecting our businesses. The rate at which the exchange rate has been increasing since 2023 is alarming,” Godson stated.

He further noted that some importers have begun boycotting the borders, especially Seme, due to the exchange rate.

“Importers no longer patronize these areas because, after clearing and paying for everything, they end up losing. So activities have dropped by between 70 to 80 percent, and the exchange rate of the dollar is also affecting this area.

“The volume of activities here is now between 22 to 30 percent. This applies to other borders as well because of the exchange rate,” he stated.

Lasisi Fanu, a former Seme Chapter Chairman of the Association of Nigerian Licensed Customs Agents, corroborated Godson’s statements and admitted that activities at the border have declined.

“That is the simple truth and fact about the situation. You can’t get anything less than what you’ve been told about the drop in activities at the borders. Every day, the CFA franc appreciates while the Naira depreciates.

“Today, I was informed that the CFA franc has increased to between N2,650 and N2,700 for 1,000 CFA francs. This began three years ago and has worsened since 2023,” Fanu stated.

Fanu explained that the Naira’s depreciation against the CFA franc is similar to its depreciation against the US Dollar.

“Whatever 1,000 CFA francs could buy in the Republic of Benin two years ago, it still buys the same amount now. It’s the Naira that is depreciating.

“That’s the reason there is no business. The people who used to go to Cotonou for business said there is no more business because their customers there have said they can no longer trade due to the high exchange rate against the Naira,” he explained.