The Federal Government, through the Nigeria Customs Service, has impounded a United States-registered Gulfstream G650ER jet belonging to a prominent Nigerian bank. This action marks the beginning of a government crackdown on private jet owners who have failed to pay import duties amounting to billions of naira.
The recent development occurred approximately two weeks
subsequent to the initiation of a one-month verification process by the NCS for
private jet owners within the country. Commencing on June 19, 2024, this
exercise is anticipated to conclude on July 19, 2024.
The customs Department has issued a public notice announcing
an initiative to identify private jet operators who have evaded import duties
by illegally importing aircraft into the country.
The customs had recovered about N2bn into the government
coffers when a similar exercise was carried out in 2019.
At least 80 private jet owners are expected to present their
import documents and aircraft certificate of registration to the Customs in
Abuja during the one-month exercise.
Although the grounding of private jets which fail to pay the
necessary import duty is expected to begin after the one-month Customs
verification exercise, findings showed that moves by some operators to export
their aircraft might have forced the NCS to begin the clampdowns on some
private jet operators.
The Nigeria Customs Service had last week said some
operators of foreign registered private jets were temporarily flying their
aircraft out of the country apparently in a bid to evade the exercise.
A recent report by BrandIconImage revealed that a luxury
Gulfstream G650ER aircraft owned by a prominent tier-1 bank was grounded at the
Lagos airport due to unpaid import duties estimated to be around N1.9 billion.
It was learnt that the NCS had written the Nigerian Civil
Aviation Authority and the Nigerian Airspace Management Agency asking them to
cancel the flight clearance approval given to the private aircraft.
Our correspondent gathered that the agencies had received
the letters to distrain the US-registered Gulfstream G650ER with registration
number N331AB and manufacturer’s serial number 6487.
The bank is reportedly owing about N1.9bn in unpaid import
duties to the government on two formerly owned private jets (Gulfstream G450
and Gulfstream G550 aircraft), which according to sources have since been taken
out of the country.
It was also understood that the assessment of N1.9bn was
based on a verification exercise carried out by the NCS in 2021.
It was learnt that going by the current exchange rate, the
N1.9bn might be raised to about N6bn. Aircraft import duties are computed based
on prevailing exchange rate.
NCAA and NAMA officials said they had received the
cancellation of the previously granted flight clearance approval for the
Gulfstream G650ER aircraft.
According to the letter, the luxury aircraft which cost over
$65m, was found to have contravened the Federal Government’s import duty
regulations and as such denied the necessary Export Permit by the Customs
Service Area Command at the Murtala Muhammed Airport, Lagos.
A copy of the letter written to the NCAA and NAMA, which was
sighted by one of our correspondents, was titled “Re: cancellation of flight
clearance approval for Gulfstream G650ER with registration N331AB and
manufacturer’s serial number 6487.”
The letter read in part, “The above subject matter
refers. The Nigeria Customs in its drive
for enhanced revenue collection decided to do a verification exercise on
private airlines operating in Nigeria.
“The verification aims to identify privately owned aircraft
that were inappropriately imported into the country. This will enable the
Service to perfect these Imports and collect revenue accruable to the Federal
Government.
“The above-cited aircraft has been found to have contravened
the Federal Government’s import duty regulations and as such denied Export
Permit by the Customs Service (MMIA Command).
“In furtherance to the above, we are soliciting your kind
co-operation and assistance to deny flight clearance approval”
The Comptroller General, NCS, Adewale Adeniyi, had two weeks
ago said a good number of private jets were leaving the country as the
verification began.
Adeniyi, who disclosed this while speaking in an interview
with Arise Television, stated that since the exercise started, only a few owners have shown up.
“Very few of them (private jet operators) have showed up for
verification and we gather intelligence that a good number of them are leaving
Nigeria since the announcement was given because they would not want to be
verified,” he said.
The CGC explained that the service introduced the private
jet verification exercise because more private jets were operating outside the
ambits of the law.
“We have seen so many of these aircraft flying and our
record tends to show that only a few of them have shown up to pay duty and this
is why we are bringing this verification up,” he said.
The CGC disclosed that data obtained from the Nigerian Civil
Aviation Authority revealed that though many private jets were operating in the
country, only a few had paid customs duties.
Adeniyi explained that when the exercise started sometime in
2019, the service realised N2bn.
“Recall this was not the first time we did it. We did
something close to this in 2019 and the exercise fetched us as much as N2bn
within the short time that we did it.
“We discovered that there are more private jets that are
operating in Nigeria but have not been brought under the ambit of the law. So
the data that we got from the NCAA shows that only very few of them paid
customs duty to operate in Nigeria,” he stated.
According to the customs boss, the international aviation
regulations show that private jets flying in the country are obliged to pay
duty.
“If they are here for a brief period in the Nigerian
airspace and return, they are not obliged to pay any duty; that is, if they are
here on a temporary importation visit. But once they are here and are used
within Nigeria, they are liable to pay duty,”
The CGC reiterated that the verification exercise was meant
to confirm “aircraft operating within the ambit of the law and those that are
operating outside the law.”
According to a Customs notice, private aircraft owners are
expected to bring some documents for the verification exercise, namely 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 clampdowns 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, no fewer than 80 private jet
operators are expected to present their aircraft import documents for
verification during the one-month exercise.
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.
Meanwhile, National Public Relations Officer, NCS, Abdullahi
Maiwada, recently confirmed the verification exercise, which began two
Wednesdays ago.
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 ground about 91 private jets over their
alleged refusal to pay import duties running to over N30bn.
The NCS had in 2021 embarked on a review of import duties
paid on private jets brought into the country since 2006.
At the conclusion of the 60-day exercise, 57 private jets,
which held licenses for commercial charter operations, were cleared and issued
Aircraft Operators Certificates by the Customs.
However, 29 private jets, whose owners presented themselves
for verification, were found to be subject to import duty payment.
Additionally, the Customs compiled a list of 62 private jets
whose owners failed to appear for the verification exercise and were
subsequently determined to be liable for import duty payment.
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