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FG targets N32bn from private jet owners

By on November 13, 2013

The Federal Government will rake in about N32bn annually as luxury tax from owners and operators of private jets in Nigeria.

This is if the attempts by the government through the Nigerian Civil Aviation Authority to impose luxury tax on private jet owners and operators sailed through.

The NCAA had in September directed the operators of private jets to pay the sum of $4,000 (N634,000) for every flight departure within the country.

A memo sent to all the private jet operators by the regulatory agency, a copy of which was obtained by our correspondent, indicated that Nigerian-registered private jets would pay the sum of $3,000 (N475,517) for every departure, while foreign registered private jets would pay $4,000 (N634,000) per departure.

Findings by our correspondent showed that there are about 139 private jets operating in the country; made up of 87 jets registered overseas and 52 jets registered in Nigeria.

Usually, private jets record between 350 and 400 flight hours every year.

This would mean that the 87 foreign registered jets would be expected to pay $4,000 each for 400 flight hours, translating to about $139m (N22.06bn), while the 52 locally registered flights would be expected to pay $3,000 each per 400 flight hours, amounting to $62.4m (N9.89bn). This brings the total amount payable to $201bn (N31.95bn).

The NCAA’s memo, dated August 28, 2013, with reference number: CAA/DG/OR/GA/VOL.11/2013/06 and signed by its Director-General, Captain Fola Akinkuotu, was entitled, ‘Order charging certain fees on operations in general aviation.’

It read, “In compliance with the provisions of Section 30 (2) (q) & (s) of the Civil Aviation Act of 2006, the authority hereby orders: All foreign registered aircraft engaging in non-scheduled operations to forthwith pay $4,000 as fees under the provisions of the law set out above for every departure, except round trips without changes in passenger manifest, or return ferry. Such fees shall be paid in advance and prior to departure.

“All Nigerian-registered aircraft engaging in non-scheduled operations shall forthwith pay $3,000 as fees under the provisions of the law set out above for every departure, except round trips without changes in passenger manifest, or return ferry. Such fees shall be paid in advance and prior to any departure.

“This order shall be effective and in force immediately upon the date of issuance. Failure to comply shall result in denial of operations and or privileges.”

The memo is, however, generating controversy in the aviation industry, with some operators arguing that the levies are illegal and threaten not to pay.

But the NCAA has filed a suit at the Federal High Court, Lagos, challenging the reluctance of foreign and locally-registered aircraft operators to pay the levies.

The agency deposed that the payment of the said fees was to take effect from the date of the issuance of the order.

The affected airlines and aircraft operators under the aegis of the Airline Operators of Nigeria described as draconian the policy, which they said amounted to double taxation and an illegality.

Recently, the government had expressed displeasure over the rising number of private jets carrying foreign registration, which accounted for over $10bn annual revenue loss through the payment of charges and taxes abroad.

The government said private jets being used for illegal charter services were ripping the country of huge revenue.

It said these operators also abstained from paying import duties, five per cent Value Added Tax and the five per cent charges to the NCAA.

The Coordinating General Manager (Communications) for Aviation Parastatals, Mr. Yakubu Dati, explained that the government was getting increasingly worried about such infractions by the private jet owners. This, he added, was curtailing “the growth of commercial charter operations, which are registered by the NCAA for specialised services.”

He said, “Out of 139 private jets operating in Nigeria, 87 are registered overseas while 52 are registered locally and when aircraft is registered overseas, it is assumed that it is visiting Nigeria as it is usually registered under a foreign operator and the implication of this is that it will not pay import duty when coming into Nigeria.”

Dati said it was time private jet owners desisted from such illegal operations to enable the government to harness the huge revenue potential from commercial charter jet operations.

He said the government would not hesitate to implement full sanctions against any errant private jet owner.

 

 

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