Import Duty: FG Summons 80 Private Jets Owners Over Operating Papers

Import duty: FG summons 80 private jets owners over operating papers

The Federal Government through the Nigerian Customs Service has begun a fresh move to clamp down on operators of improperly imported private jets into the country, findings by The PUNCH have revealed.

Consequently, no fewer than 80 operators of private jets are expected to appear at the headquarters of the NCS in Abuja with their aircraft import documents.

The special aircraft import verification exercise, which begins on Wednesday (tomorrow), is expected to last for 30 days, according to a public notice issued by Customs.

The notice, sighted by one of our correspondents, read in part, “The Nigeria Customs Service announces a verification exercise for privately owned aircraft operating in Nigeria. This exercise aims to identify improperly imported private aircraft without documentation, ensuring proper imports and maximum revenue collection.”

According to the notice, owners and operators of private jets in the country are to come with some relevant documents.

These include aircraft Certificate of Registration, Nigerian Civil Aviation Authority’s Flight Operation Compliance Certificate, NCAA’s Maintenance Compliance Certificate, NCAA’s Permit for Non-Commercial Flights, and Temporary Import Permit (if applicable).

The latest plan to clamp down on operators of improperly imported private jets came more than one year after the Federal Government suspended the action.

In the past three years, the government had planned to recover import duty running into billions of naira from some private jet operators who had used certain technical loopholes to evade the payment of import duty.

A few private jet owners paid the mandatory import duty after the Hameed Ali-led NCS took some significant steps to recover the revenue. However, several owners and operators of private jets in the country have yet to pay the statutory duty.

Many private aircraft operators in the country have allegedly explored technical loopholes in the regulation to fraudulently obtain a Temporary Import Permit from the Nigeria Customs Service instead of paying the statutory import duty on their imported aircraft.

The TIP, which is valid for an initial period of 12 months, can be extended by six months twice, according to the regulations.

However, several operators of private jets in the country have continued to extend the TIP indefinitely, a development that prompted the Customs to effect past clampdowns.

According to new findings by our correspondents, no fewer than 80 private jet operators are expected to present their aircraft import documents for verification during the one-month exercise.

“Based on the data we have, we are expecting no fewer than 80 private aircraft operators for the verification exercise. These include operators of about 20 private aircraft that have been imported since the last verification exercise,” a top official close to the verification exercise told The PUNCH on condition of anonymity because he was not authorised to speak on the matter

The exercise is expected to lead to the payment of the mandatory import duty, while aircraft operators who fail to pay may have their jets grounded.

The TIP has been described by some stakeholders as a fraudulent means of evading the mandatory import duty. Importers of private jets, especially foreign registered private jets, are expected to pay five per cent of the value of the private jet as import duty.

However, due to the high cost of private jets, some owners often prefer not to pay the import, according to Customs officials.

Instead, the operators prefer to obtain a TIP under the guise that the aircraft is coming into the country for a temporary period, quoting the International Civil Aviation Organisation Convention Article 24 which focuses on Customs waiver for commercial aircraft operating in a country temporarily.

But the new leadership of Customs appears poised to get all operators to pay the import duty.

Unconfirmed sources said the government might get close to N100bn in unpaid import duty on imported private aircraft due to the high exchange rate.

This analysis is however dependent on whether the Customs chooses to implement the 25 per cent penalty fee such aircraft owners are meant to pay for delayed payment. The 25 per cent penalty fee is in addition to the statutory five per cent import duty.

It is unclear If the private aircraft operators will be willing to cooperate with the government to pay the duty.

Customs posts N1.3trn revenue in Q1 2024
Some operators had in the past gone to court to stop the government from collecting the revenue.

Meanwhile, National Public Relations Officer, NCS, Abdullahi Maiwada, on Monday, confirmed the verification exercise, which is scheduled to begin on Wednesday.

In response to enquiries by The PUNCH on what actions the agency would take after the verification exercise, Maiwada simply said, “All we are doing is to ensure maximum revenue collection for the Federal Government. Relevant sections of our extant laws and regulations will guide our actions and inaction during and after the exercise.”

Sometime in 2021, about 17 owners of foreign-registered private jets, comprising top business moguls, leading commercial banks, and other rich Nigerians, dragged the Federal Government to court, seeking to stop the grounding of their planes over alleged import duty default.

This came after the Federal Government approved the decision of the Nigeria Customs Service to the ground about 91 private jets over their alleged refusal to pay import duties running to over N30bn.

The NCS had in a letter directed the Nigerian Civil Aviation Authority, the Federal Airports Authority of Nigeria, and the Nigerian Airspace Management Agency to ground the affected private jets with immediate effect.

However owing to issues bothering on inter-agency rivalry and disagreements, the relevant government agencies could not ground the private jets.

The jet owners who sued the government were seeking a judicial review as to whether it was lawful for them to pay the controversial import duty on their private jets or not.

They had sued the government using the foreign shell companies and trustees through which the foreign-registered jets were purchased.

Oftentimes, Nigerians and corporate bodies buy their foreign-registered private jets through foreign shell companies and trustees. Experts believe Nigerians prefer to register their jets in foreign countries like the United States, United Kingdom, and Isle of Man, among others, to preserve the value of the aircraft in the event they want to sell it. This also helps them to pay cheaper insurance premiums.

According to the court document, the 17 applicants, which are mostly foreign companies of the Nigerian jet owners are Aircraft Trust and Financing Corp Trustee, UAML Corp, Bank of Utah Trustee, Masterjet AVIACAO Executive SA, and Cloud Services Limited.

Others are MHS Aviation GmbH, Murano Trust Company Limited, Panther Jets, SAIB LLC, Empire Aviation Group, and Osa Aviation Limited.

The list also includes BUA Delaware Inc., Flying Bull Corporation Limited, Air Charter Inc., Sparfell Luftahrt GmbH, WAT Aviation Limited, and ATT Aviation Limited.

The NCAA and Customs were listed as respondents to the suit.

However, in a written address in support of the first respondent’s objector notice of preliminary objection, the court paper had read in part, “The brief facts of this case are that the first respondents, having discovered that some operators of aircraft imported them under the guise of Temporary Importation Permit, were permanently imported into Nigeria and given TIP status to evade payment of lawful customs.”

The NCS had in 2021 embarked on a review of import duties paid on private jets brought into the country since 2006.

Following the alleged discovery that several private jet owners, under the guise of Temporary Import Permit, had failed to pay the statutory import duty to the coffers of the government, the then CG of Customs, Hameed Ali, set up a verification panel to review all TIPs and the relevant aircraft import documents of all private jets in the country.

At the end of the 60-day exercise, 57 private jets, which had licences for commercial charter operations, were cleared and issued Aircraft Operators Certificates by the Customs.

However, 29 private jets, whose owners came for the verification, were found to be liable to pay the import duty.

The Customs also compiled a list of another 62 private jets whose owners failed to appear for the verification exercise but were found liable for import duty payment.

However, other private jet owners seeking to pay their import duty were given a 14-day ultimatum to clear the debts.

The number of jet owners who later paid the duty is still unclear. It is still unclear to what extent the new management of Customs is willing to get the powerful private jet owners to pay their import duty.

Source:- Punchng