The Federal Government has affirmed its commitment to fully implement the new Tax Reforms Act, which will take effect from January 1, 2026, insisting that all airline operators must now pay Value Added Tax (VAT) on their services and operations.

This announcement comes despite objections from the International Air Transport Association (IATA), which accused the government of violating several international agreements, including the December 2024 Economic Community of West African States (ECOWAS) treaty.

This treaty prohibits member states from imposing taxes on air passengers and cargo.

At a recent business webinar themed “Nigeria Tax Act (2025) & The Aviation Industry: Aviation Sector Enlightenment Initiative”, jointly hosted by Aviation & Allied Business and the Federal Inland Revenue Service (FIRS), stakeholders described the new tax measures as a form of multiple taxation on the aviation sector.

Mrs. Nkechi Umegakwe, Assistant Director at the Nigeria Revenue Service (formerly FIRS), who was the lead presenter at the event, emphasized that the government had carefully reviewed the new tax laws before their enactment.

She stated categorically that airline operators and related businesses would be required to pay VAT on all services from the start of 2026.

Currently, airlines are exempt from paying import duties and VAT on the importation of commercial aircraft, engines, spare parts, and air tickets. Under the new law, however, these exemptions will be removed, and VAT will apply.

Umegakwe explained that the reforms aim to increase government revenue, reduce business costs through VAT recovery mechanisms, improve cash flow for businesses, and enhance tax compliance via digital invoicing and tracking.

The reforms also seek to harmonize different taxes under a unified system to improve efficiency and simplify existing tax laws.

She stated: “VAT is a consumption tax paid by the final consumer, not the supplier. Airlines must pay VAT on imported aircraft, engines, and spare parts starting January 1, 2026. However, they can request refunds within 30 days.”

The Federal Government had previously exempted airlines from customs duties and VAT in late 2021.

Dr. Samson Fatokun, Area Manager for West and Central Africa at IATA, criticized the government’s position, highlighting that airlines already face a heavy tax burden, including a 5% Ticket Sales Charge/Cargo Sales Charge (TSC/CSC). He argued this levy inflates ticket prices and deters passengers.

Fatokun also noted that President Bola Tinubu, as ECOWAS Chairman in December 2024, signed a treaty banning taxes on air passengers and cargo starting January 1, 2026. Nigeria is also bound by the International Civil Aviation Organisation (ICAO) treaties, which prohibit VAT on air transportation, since aviation is regarded as a cost-recovery industry rather than a revenue-generating sector.

He warned that reinstating VAT for airlines would contravene these international agreements.

Aviation expert Capt. Samuel Caulcrik expressed concerns that the combined impact of VAT and existing levies such as the TSC/CSC amounted to multiple taxation, which hampers growth in the sector.

He stressed that additional taxes would reduce passenger numbers and hurt the industry.

Mrs. Nkechi Onyenso, Managing Director of Pathfinder Securities, called for ongoing dialogue between the government and aviation stakeholders.

While acknowledging the potential benefits of the Tax Reforms Act, she pointed out that challenges such as foreign exchange shortages and multiple taxes continue to negatively affect the aviation industry.

Just two days after suspending its nationwide strike, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has warned it may resume industrial action, accusing the Dangote Refinery of failing to uphold a key labour agreement.

In a joint statement signed by NUPENG President Williams Akporeha and General Secretary Afolabi Olawale, the union expressed dismay over what it described as a breach of the resolutions reached with the Dangote Group, the Federal Government, and representatives of petroleum tanker drivers under the NUPENG-PTD branch.

The union said it was placing its members on “red alert” and called on the Nigeria Labour Congress (NLC), the Trade Union Congress (TUC), international labour groups and civil society organisations to support what it described as a fight against “capitalist oppression.”

The disagreement centres around the unionisation of workers at the Dangote Refinery and Petrochemicals.

NUPENG claims that although an agreement was reached and signed during a high-level meeting on Monday involving the Department of State Services (DSS), Minister of Finance Wale Edun and labour leaders, management has backtracked on the commitments made.

According to NUPENG, Dangote’s management had agreed to respect workers’ right to unionise under Nigerian labour laws.

However, the union alleges that truck drivers were recently instructed to remove NUPENG-PTD stickers from their vehicles, signaling a reversal of the agreed position.

“This is a blatant violation of the memorandum signed at the DSS office,” NUPENG said.

“We call on the Federal Government to ensure that the Navy and other security agencies are not used to suppress workers’ rights or enforce illegal directives.”

During the DSS-brokered meeting held on September 8, both sides signed a Memorandum of Understanding (MoU), affirming that employees of Dangote Refinery and Petrochemicals would be free to join labour unions if they so choose.

Key points from the MoU include Recognition of workers’ right to unionise, in line with Nigerian labour laws, Immediate commencement of the unionisation process, to be completed within two weeks (by September 22), A commitment by Dangote management not to sponsor or form a rival union as we as A guarantee that no employee would face retaliation for participating in union activities.

The MoU was signed by representatives from the Dangote Group, NUPENG, NLC, TUC, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Federal Ministry of Labour and Employment.

The management of Dangote Refinery has denied all allegations of anti-labour practices.

In an earlier statement, company spokesman Anthony Chiejina described the union’s claims as “cheap blackmail” and insisted that operations at the refinery continued normally during the strike.

“We remain committed to dialogue and transparency,” he said.

“There is no fuel shortage, and talks are ongoing.”

The strike was initiated earlier this week by NUPENG’s Petroleum Tanker Drivers (PTD) unit, which alleged that Dangote Refinery was hiring new drivers under the condition they not join the union.

This claim was denied by Dangote’s management, but the issue escalated, prompting government intervention.

The 650,000 barrels-per-day refinery, the largest in Africa, officially launched operations last year, aiming to reduce Nigeria’s dependence on imported petroleum products.

However, its rapid growth has sparked concerns about monopoly power and strained relationships with existing fuel transport operators.

Dangote’s plan to deploy a new fleet of compressed natural gas (CNG) trucks has also met resistance from the current network of over 20,000 diesel tanker drivers, many of whom are unionised under NUPENG.

With tensions rising again, all eyes are on the Ministry of Labour, which is expected to issue a formal statement soon.

Parties are scheduled to report back to the ministry a week after the unionisation process concludes, but whether that process will even proceed as agreed remains uncertain.

Unless the current disagreement is resolved quickly, Nigeria could face renewed disruptions in fuel transportation and a deepening standoff between labour and one of the country’s most powerful industrial players.