The federal government has exempted commercial flight
tickets from value-added tax (VAT).
This is contained in the 2020 finance bill, which was signed
into law by President Muhammadu Buhari on December 31, 2020.
The bill exempts “airline transportation tickets issued and
sold by commercial airlines registered in Nigeria” and “hire, rental or lease
of tractors, ploughs and other agricultural equipment for agricultural
purposes” from VAT.
Value-added tax (VAT) is a consumption tax placed on a product
whenever value is added at each stage
A five percent VAT is charged on airline tickets and
remitted to the federal government.
The finance law also states that land & building are not
taxable goods for VAT purposes.
This means VAT is not applicable on transfer of land, house
rent and purchase, lease of residential /commercial property.
In 2018, Buhari had announced the removal of VAT from
domestic air transportation to make it affordable for citizens and create job
opportunities in the aviation sector.
“This will make air travel more affordable and subsequently
lead to the creation of jobs by the air transport service value chain as well
as increase revenues for the government,” the president said at the time.
In a letter read on the floor of the senate and house of
representatives on December 1, Buhari had said the 2020 finance bill will
prioritise “job creation, economic growth socio-economic development, domestic
revenue mobilisation, as well as foster closer coordination with monetary and
trade policies”.
The 2020 finance act amends the capital gains act; companies
income tax act; industrial development (income tax relief) act; personal income
tax act; tertiary trust fund act, customs and excise duties tariff, and
value-added tax act to mention a few.
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