Nigeria Urged to Reassess Taxes on Free Trade Zones to Preserve Aviation Hub
In a recent appeal to the Nigerian government, stakeholders in the aviation sector have called for a reconsideration of the proposed tax imposition on companies operating within free trade zones (FTZs). This policy shift threatens the viability of significant aviation facilities, including the private jet maintenance hub operated by ExecuJet Nigeria at Lagos International Airport. This hub is a critical asset not just for Nigeria but for the entire African continent, as it offers cost-effective maintenance services due to current tax exemptions.
Sam Iwuajoku, the administrator of the Quits Aviation Services Free Trade Zone, where ExecuJet Aviation Nigeria FZE is located, has voiced significant concerns regarding the potential impacts of this tax reform. In discussions with Business Day and This Day Live, Iwuajoku highlighted that the facility not only provides essential maintenance, repair, and overhaul (MRO) services but also plays a crucial role in training local staff with expatriate expertise and supports over 1,000 jobs.
The proposed tax changes pose a direct threat to these jobs and the broader economic benefits that the zone delivers. Iwuajoku warns that if the tax exemptions are lifted, the cost of aircraft maintenance for Nigerian owners will surge, as they will be compelled to seek services from overseas hubs, thus increasing operational costs and impacting the local aviation industry’s competitiveness.
Currently, the Nigeria Export Processing Zones Authority (NEPZA) facilitates various incentives for enterprises within free zones, such as tax exemptions and reduced foreign exchange risks, which are pivotal in attracting and retaining investments. The ExecuJet facility at Lagos, a partnership between the ExecuJet Aviation Group and Quits Group, exemplifies the type of investment that these incentives are designed to support. Spanning a 22,835 square metre concrete apron and a 4,074 square metre hangar, the facility caters to a broad range of business jets, providing both line and scheduled maintenance services.
The facility is accredited by several international aviation authorities, including the Nigerian Civil Aviation Authority, the South African CAA, the Bermudan CAA, and the Cayman CAA, with EASA certification also in progress. Such credentials underscore the facility’s importance not only as a regional but as a global player in the aviation maintenance sector.
The spectrum of aircraft serviced at this facility is extensive, including models from Bombardier Business Aircraft, Dassault Falcon Jet, Embraer, and Hawker Beechcraft among others. This diversity reflects the hub’s crucial role in the business jet market both in Nigeria and for visiting aircraft from across the region.
Reevaluating the tax imposition on FTZs like the one housing ExecuJet is critical not only for the preservation of existing jobs and economic benefits but also for ensuring the transfer of technology and skills crucial for the development of Nigeria’s aviation sector. The potential increase in maintenance costs could deter private jet owners from using local facilities, pushing them to seek services abroad and negatively affecting the local economy as a whole.
Stakeholders, including Iwuajoku and other industry experts, continue to urge the Nigerian government to consider the broader implications of such tax reforms on the strategic sectors of the economy. Their call emphasizes the need for policies that support the growth and sustainability of industries that have significant multiplier effects on technology transfer and job creation. As discussions progress, the future of Nigeria’s position as a preferred maintenance hub in Africa hangs in the balance, dependent on the decisions made today.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com