After the spate of air crashes of 2005 and 2006, several high-net-worth Individuals, banking institutions, and some multinational corporations sought a safer and more convenient alternative to commercial airline services within the domestic aviation market in Nigeria.
This desire, coupled with the established class system within the country, fuelled by an inferiority complex has resulted in an insatiable appetite for acquisition, ownership, and operation of personal business and corporate jets.
By 2008, the acquisition of the business and corporate aircraft became the norm with commercial banking institutions, HNWI, and some corporations in the energy sector joining the fray of what has since become a “status symbol”, and recently dominated by, aside from the typical multinational corporations and banking institutions, the Nigerian elites, politicians and nouveau riche.
Hitherto, aircraft acquisition by multinationals that dominated the who is who list of private aircraft owners in Nigeria was informed by prudence and practicality.
These assets were acquired usually based on exhaustive cost-benefit analyses by their logistics department to determine, not only the cost-efficient aircraft type but their actual demands to justify the acquisitions.
This informed the acquisitions of the Hawker Siddeley HS-125 series and Falcon 50 aircraft types at the time, depending on their typical operations nationwide and globally, as exemplified by the Nigerian National Petroleum Corporation (NNPC), Presidential Fleet, and multinational oil corporations such as Shell and ExxonMobil.
However, in recent times such acquisitions have been dictated not by needs or practical requirements, but largely by what is trending, which has informed the emergence and preeminence of such behemoth aircraft types as the Bombardier Global Express 7500, Falcon 7X, Embraer Legacy 650, etc., within the Nigerian domestic airspace.
Until recently, all the aircraft imported into the country attracted Customs import duty and applicable surcharges, in tandem with the provisions of the Nigerian Customs Service’s (NCS), Customs Excise & Management Act (CEMA), and import duty tariffs.
Following persistent agitations of the commercial domestic airline operators under the aegis of the Airline Operators of Nigeria (AON), the Federal Government amended the import duty regime on all aircraft to exclude the domestic commercial airline fleet, associated aircraft spare parts, engines, etc., under the Schedule 2 of the CEMA 2021, exempting commercial aircraft from paying import duty.
With this development, the NCS recently embarked on a 60-day corporate and business jet aircraft verification exercise, to determine and separate the private fleet from the commercial aircraft operated by the Nigerian domestic airlines.
Amongst the major findings by Aviation Metric from the verification exercise is the gross and flagrant abuse of the Temporary Importation Permit (TIP) concession by most private aircraft owners in the country, essentially to evade the payment of the statutory import duty charged at 5 percent on the assessed value of their aircraft acquisitions.
In order to understand the applicability or otherwise of the TIP concession, a cursory review of the context and rationale of the Istanbul Convention on Temporary Admission of June 26, 1990, under the auspices of the Customs Co-Operation Council (CCC), to which the NCS is a signatory would be appropriate.
A preliminary review of the preamble of the above-mentioned Convention would reveal that the context under which it was proposed and ratified was premised solely on the simplification and harmonisation of Customs procedures internationally to facilitate global trade.
Under Article 4 of the Istanbul Convention, each Contracting Party, in this case, the NCS has a right to and does impose a Security as a condition for the temporary admission of goods (including means of transport). Clause 4 specifically states that “For goods (including means of transport) subject to import prohibitions or restrictions under national legislation an additional security may be required under the provisions laid down in national legislation”.
For this reason, the NCS imposes a Bond requirement comprising 5% import duty on private aircraft and a penalty of 25% of the assessed value of the aircraft, plus sundry charges as security for the admission of an aircraft on a temporary basis. The several Articles contained in the Istanbul Convention were deliberately couched and addressed to specifics to avoid any ambiguities.
For example, Article 6 addresses the issue of identity, which in the case of an aircraft is defined by its Manufacturer’s Serial Number (MSN), Make and Model, and in some cases the aircraft registration mark, where that has not changed.
Article 7 of the Convention addresses the issue of “Period of Re-Exportation”, wherein Clause 1 specifically states that “Goods (including means of transport) granted temporary admission shall be re-exported within a given period considered sufficient to achieve the object of temporary admission”.
Meanwhile, Article 9 of the Convention affirms that the re-exportation of goods imported on temporary admission (including means of transport) terminates the process, or otherwise as stated in Article 13 wherein the goods are converted to home use at the expiration of the temporary admission period.
The Istanbul Convention was intended to simplify and harmonise international Customs procedures to facilitate global trade for the economic development of territories, and not for the enhancement of personal lifestyles of private and wealthy individuals to the detriment of the state.
The application of the Convention was and is intended for commercial trade, wherein it is envisaged that certain high-value goods, such as oil rigs, aircraft, vessels, etc., required for multimillion Dollar projects may be cost-prohibitive and constitute a major hindrance to their successful completion and hence economic development of territories.
The NCS’ aircraft verification exercise determined that most of the aircraft on temporary admission had overstayed the maximum allowable period of 24 months, with some having been in the country since 2008.
Also, it was established that most of these aircraft procured their Temporary Importation Permits (TIP) after the fact. Indeed, for an aircraft to enjoy the temporary admission concession, the procurement of the TIP is a requirement before the importation of the aircraft into the country.
It is expected that the aircraft owner or representative would have applied to the Comptroller General of Customs (CGC) for the grant of a TIP in respect of the particular aircraft being sought to be imported into the country.
The CGC would in turn, after due scrutiny of all the submitted documents relating to the application and the owner having met and fulfilled the stipulated requirements, including posting a Bond as security, approve and have a TIP issued specifically for the aircraft in question.
The TIP is required to be presented to the Customs post at the port of entry, where an inspection of the aircraft would be conducted to determine that the aircraft imported is that for which the TIP was issued.
Upon successful inspection, a Customs Bill of Entry would be issued indicating the particulars of the imported aircraft and the date and time of entry amongst other pertinent information.
Similarly, at the expiration of the temporary admission tenure, the reverse process is expected, whereby the aircraft is re-exported permanently out of the Nigerian territory.
In this case, the aircraft is expected to be presented again to the Customs post at the port of departure, which can be any designated port of departure in the country and not necessarily the port of entry as provided for under Article 11 of the Convention.
The elucidated procedure only addresses one leg of the aircraft importation and exportation process into the country. The other equally important leg of the process is with the Federal Ministry of Aviation, the supervising Ministry for all aviation-related matters.
For the importation of an aircraft into the country, the owner or representative is required to apply to the Minister of Aviation for a “Permit to Import”, which is typically issued upon review of the documents submitted in support of the application and is aircraft specific, detailing the particulars of the aircraft to be imported.
The approval to Import is usually communicated not only to the owner or representative applicant but also to the Nigerian Civil Aviation Authority (NCAA) for information and the applicant is advised to liaise with the NCAA for the aircraft importation.
This is a process that all private aircraft owners have undertaken without exception, especially because for them to operate these aircraft within the Nigerian airspace, they would require the necessary certifications from the NCAA.
In this regard, the NCAA usually performs the mandatory pre- and post-arrival inspections on the subject aircraft, following which it issues the Flight Operations Clearance Certificate (FOCC) and Maintenance Clearance Certificate (MCC), if they remain on their foreign register as is typically the case.
The FOCC and MCC typically have a lifespan of six months, following which they are required to be renewed by the NCAA after further necessary inspections, with a possible maximum of 24 months. At the end of this possible maximum of 24 months, the aircraft is required to be exported.
The process of exportation of the aircraft on the aviation leg also requires an application to the Minister of Aviation for a “Permit to Export” at the expiration of this 24-month tenure.
The Minister typically issues a permit to export approval, again putting the NCAA in copy and requiring the aircraft owner or representative applicant to liaise with the NCAA.
The requirement for further liaison with the NCAA is to ensure that its register of in-country aircraft inventory is regularly updated, as aircraft are imported into the country and then re-exported, to ensure visibility and necessary oversight on the various aircraft operating within the Nigerian airspace at any particular given time.
Furthermore, it is expected that for the re-exportation process to be brought to a full close, following the issuance of the Permit to Export by the Minister, the aircraft owner or representative applicant having contacted the NCAA as mandated by the permit, would have all the outstanding and still valid certifications issued by the NCAA in respect of the particular aircraft canceled and formally removed from its in-country aircraft inventory.
This situation is made worse as a result of the various relevant agencies of government, in this case, the NCS and NCAA acting as silos, with absolutely no line of communication or liaison between them thereby creating a lacuna being exploited by the private aircraft owners and or representatives to the detriment of national security, not to mention their contrived acts of economic sabotage through the intentional evasion of import duties and sundry tax liabilities.
This development brings into sharp focus one of the main issues established by the NCS’ aircraft verification exercise, being that of the aircraft re-exportation requirement, following the expiration of the maximum allowable tenure of the TIP granted in favour of an aircraft on temporary admission.
The NCS verification committee established that most aircraft on temporary admission have in the main exceeded their legitimate stays in the country and in some other cases procured the TIP’s after the fact merely as a means of regularising the stay of their aircraft in the country.
Evidently, private aircraft owners and their representative applicants are alleged to have deliberately ignored the second leg of the aircraft re-exportation process involving the Ministry of Aviation necessary to bring closure to the process.
The verification committee source who spoke on condition of anonymity because he was not authorised to speak with the media disclosed that by “intentionally not liaising with the NCAA for the re-exportation of their aircraft or informing the Ministry of Aviation through an application for the permit to export, the aircraft owners or representative applicants acted deliberately to avoid the cancellation of their various certifications issued by the NCAA in respect of their aircraft.”
“They then only file for exportation with the NCS at the designated port of departure and collect all the necessary documentation as “proof” of re-exportation, he added.
Unfortunately, whereas the private aircraft owners or representatives have usually fulfilled the necessary aircraft importation requirements in order to bring their aircraft into the country, they have however sidestepped or intentionally ignored the two-legged exportation procedures outlined above.
This has been found to be done with a view to deliberately beat the system, with the sole intention of feigning exportation of the subject aircraft, when in actual fact they had only in most cases undertaken foreign trips for personal reasons or to perform scheduled maintenance on their aircraft. Either way, the aircraft was never fully re-exported as required by the terms of the convention on temporary admission.
By not informing the Ministry of Aviation to procure the required “Permit to Export” and thereafter not liaising with the NCAA, the private aircraft owners and or representatives have deliberately left the door open for the supposedly “re-exported” aircraft to surreptitiously return into the country for continued use, without arousing any suspicions of the NCS or NCAA, with the sole intention of evading the payment of the statutory import duties and associated taxes and charges for the importation of their aircraft.
The context of “re-exportation” as espoused under Article 7 of the Convention, when read in conjunction with Article 6, clearly intends that any goods on temporary admission must be identifiable, in the case of aircraft with their Manufacturer’s Serial Numbers (MSN),
Make and Model and were unchanged, registration marks, such that at the expiration of the period for which temporary admission is granted, the goods can be positively identified and thereafter permanently re-exported.
The re-exportation processes undertaken by the various private aircraft owners as found out by the NCS’ Aircraft Verification Committee, were merely ruses, exercises designed to hoodwink the system to believe that the subject aircraft had been formally re-exported as mandated by the provisions of the Convention when in reality they had only undertaken foreign trips for convenience with deceptive intentions.
Importantly, the Convention does NOT permit the re-importation of the same good back into the country after re-exportation.Google+