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Nigerian Airlines Spend over N10bn Annually on Taxes

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Domestic Airlines
  • 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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Dangote Commits $700M To Sugar Production In Support of Backward Integration Policy

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Dangote Sugar Refinery Plc

The management of Dangote Sugar Refinery Plc has said it is committing over $700m to its sugar projects to support the Backward Integration Policy of the Federal Government to make Nigeria self-sufficient in sugar production.

According to a statement issued on Sunday by Dangote Industries Limited, the company disclosed this to visiting members of the Nasarawa House of Assembly on Friday.

The company noted that Nigeria was one of sub-Saharan Africa’s largest importers of sugar, second only to South Africa with an annual import of over $337m.

The Dangote Sugar management however assured the lawmakers that with the completion of its sugar projects in Nasarawa and Adamawa under the BIP, the nation would be saved more than half of the forex expended on sugar imports annually.

It added that the investment would also lift its people as other people-oriented infrastructures would come with the sugar projects.

The state lawmakers commended the Dangote Group for the choice of the state for the project and the accelerated pace with which the project was being executed, despite occasional delays arising from communal disagreements.

General Manager for the BIP, Dangote Sugar, John Beverley said when the factory was fully operational, it would have the capacity to crush 12,000 tons of cane per day, while 90MW power would be generated for both the company’s use and host communities.

He also disclosed that some 500km roads in all would be constructed to ease transportation within the vicinity. He solicited the support of the lawmakers in controlling the menace of land encroachment by settlers and itinerant farmers.

The Speaker of the Nasarawa State House of Assembly, Ibrahim Abdullah, and his team members, who were conducted around the company’s 78,000 hectares BIP in Tunga Awe Local Government Area commended the company for the project.

Abdullah noted that it would not only open up opportunities in the state but in Africa as a whole, and said the lawmakers were ready to partner and support the company towards the realisation of the sugar project through the relevant legislation.

When phase II of the project is completed, according to the company, it will make it the largest sugar refining plant in Africa.

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French Trade Advisors pledge Massive Investment In Lagos Free Zone

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The Conseillers du Commerce Exterieur (French Foreign Trade Advisors) has expressed readiness to invest massively in the Lagos Free Zone (LFZ) being developed by the Tolaram Group as they endorsed the zone as the ideal industrial destination for French businesses in Nigeria.

This was made known on Thursday, April 15, 2021, during a visit to the Lagos Free Zone. The delegation led by the Ambassador of France to Nigeria, His Excellency Jerome Pasquier accompanied by his Economic Advisor, the Consulate General of France in Lagos and the Conseillers du Commerce Exterieur comprising of CEOs of several French businesses in Nigeria.

Speaking during the visit, the Ambassador of France in Nigeria, His Excellency Jerome Pasquier explained that the aim of the visit of the Conseillers du Commerce Exterieur to Lagos Free Zone (LFZ) was to discover the opportunities in the Lagos Free Zone and the Lekki Port project, which is expected to have a huge positive impact on businesses in Nigeria.

Pasquier commended Tolaram Group, the promoter of the zone, for the foresight of integration of Lekki Port into the master plan of the Lagos Free Zone (LFZ), which would serve as the gateway for import and export from the zone thereby giving businesses in the zone a competitive edge.

The Ambassador also commended the Lagos Free Zone (LFZ) for its Master Plan for the zone which includes world-class infrastructure that is in line with its vision to be the preferred industrial hub and investment destination in West Africa.

“I am impressed by the huge size of the Lagos Free Zone project. We are very happy that the French companies will be deeply involved in this Lagos Free Zone project. It is really impressive to see how ambitious this project is. The French Minister was in Nigeria yesterday and I explained to him that Nigeria is a country where we can have big projects. For us, this project means big opportunities and that explains why we need to be here. We are happy to be here and work with Tolaram Group”, he added.

It is noteworthy to mention that the first French company to be established in the Lagos Free Zone is the terminal operations arm of CMA – CGM which has established a subsidiary within the Lagos Free Zone and is the appointed operator for the container terminal operations scheduled to commence at Lekki Port next year.

In his remarks, the Chief Executive Officer, Lagos Free Zone (LFZ), Mr. Dinesh Rathi assured the Ambassador of France and the Conseillers du Commerce Exterieur that the zone remains the best destination for investment in Nigeria and the West African sub-region given the seamless integration with Lekki Port and the world-class infrastructure provided by Lagos Free Zone.

Explaining the configuration of the zone, Rathi disclosed that the clustering is planned in line with the international best practices of Work, Live, and Play. He stated that the land-use plan of the Lagos Free Zone allocates 70 percent area towards industrial developments, 20 percent towards logistics and support services while the real estate will cover the remaining 10 percent.

He also stated that Lagos Free Zone (LFZ) has simplified the process of business entry and operation in the zone in line with the Federal Government of Nigeria’s Ease of Doing Business policy.

“We have made it very easy for the business to berth and take off at zone by making our process less cumbersome and friendly, we are open for business 24/7 and willing to help investors to settle in very fast,” he said.

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AIICO Refutes Claims of Non-Remittance of Pension Assets to PTAD

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AIICO Insurance Plc has refuted claims of non-remittance of pension assets to the Pension Transitional Arrangement Directorate (PTAD).

This was disclosed recently in a statement by Segun Olalandu, the Head, Strategic Marketing and Communications Department.

It stated: “The attention of the Management of AIICO Insurance Plc. has been drawn to a recent report in the media on allegations of non-remittance of pension assets to the Pension Transitional Arrangement Directorate (PTAD).

“AIICO Insurance Plc. hereby wishes to inform the public that all pension assets due for remittance have been duly transferred to PTAD since the year 2017, in full compliance with the directive. Both parties are presently engaged in a reconciliation exercise to conclude the process. We implore the public to disregard any information that may suggest otherwise as there is no basis to that effect.”

Mr. Segun assured that AIICO Insurance Plc. remains a responsible corporate citizen of Nigeria and will continue to engage the best practice in all its business activities and operations in line with extant laws and regulatory provisions guiding its practice.

AIICO Insurance is a leading composite insurer in Nigeria with a record of serving our customers that dates back over 50 years. Founded in 1963, AIICO provides life and health insurance, general insurance, and investment management services as a means to create and protect wealth for individuals, families, and corporate customers.

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