NCAA Summons Overland Airways Over VAT Charges on Pre-2026 Air Tickets
The Nigerian Civil Aviation Authority (NCAA) has summoned Overland Airways to address a contentious dispute regarding the application of Value-Added Tax (VAT) on air tickets purchased before the implementation of new tax regulations in 2026. This development follows a formal complaint lodged by a passenger through social media platform X, highlighting concerns over additional charges imposed on tickets bought during the previous year.
Background of the Tax Policy Shift
Historically, airlines operating within Nigeria enjoyed exemption from VAT on air ticket sales. However, this changed when the Nigeria Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS), announced in September 2025 that airlines would become liable for VAT on tickets effective from January 1, 2026. This policy shift marks a significant transformation in aviation taxation, aligning with broader national tax reforms aimed at enhancing government revenue streams.
The specific complaint that triggered the NCAA's intervention involved an 86-year-old passenger who was asked to pay an extra N11,286 as VAT on a ticket purchased in 2025. This incident has sparked widespread debate about the retrospective application of new tax laws and their impact on consumers who made purchases under the previous regulatory framework.
Overland Airways' Position and NCAA Response
During the meeting convened by the NCAA, Overland Airways presented a compelling argument regarding the timing of tax application in aviation. The airline maintained that aviation taxes should be levied when tickets are actually flown, not at the point of purchase. Furthermore, Overland Airways claimed to have a standing understanding with tax authorities supporting this interpretation of tax liability timing.
Michael Achimugu, the NCAA's Director of Public Affairs and Consumer Protection, confirmed that the authority's delegation included multiple senior officials: directors of consumer protection and air transport regulations, the general manager of policy and enforcement, representatives from flight operations and adjudication departments, and legal experts from the NCAA's legal directorate. This comprehensive team underscores the seriousness with which the aviation regulator is approaching this tax implementation issue.
Conflicting Interpretations and Required Clarifications
The NCAA has taken a firm position that any previous arrangements between airlines and tax authorities would be superseded by the new tax laws unless explicitly stated otherwise by the NRS. Interestingly, the NCAA's director of air transport regulations had previously received guidance from tax policy expert Taiwo Oyedele suggesting that VAT should not apply to tickets purchased before 2026. However, the authority emphasizes that official clarification from the NRS remains essential for definitive resolution.
In response to this regulatory uncertainty, the NCAA has directed Overland Airways to seek formal clarification from the NRS regarding whether VAT can be applied retrospectively to tickets purchased before 2026 but flown after the new tax regime took effect. The airline expressed legitimate concerns about potential financial liabilities if the tax authority rules in favor of retrospective application, which could involve substantial accumulated tax payments.
Consumer Protection Measures and Industry Implications
The NCAA has implemented protective measures for affected passengers, instructing Overland Airways to refund all customers if the NRS confirms that tickets purchased before 2026 should not attract VAT. The airline has agreed to comply with this directive and committed to submitting the NRS response to the NCAA within ten days, demonstrating cooperation with regulatory requirements.
This tax dispute occurs against a broader industry backdrop where airline executives have expressed concerns about the new tax regime's impact. Allen Onyema, Chief Executive Officer of Air Peace, has previously warned that the tax provisions could lead to increased airfares and operational challenges for Nigerian carriers. Onyema emphasized that a significant portion of ticket revenue already comprises various taxes paid to government agencies, countering perceptions that airlines are profiteering from high ticket prices.
The resolution of this VAT dispute will establish important precedents for how Nigeria's aviation sector navigates the transition to new tax regulations while balancing consumer protection, airline viability, and government revenue objectives.
