Ethiopian Airlines has admitted that it has asked the Federal Government of Nigeria for a 15-year tax moratorium, among other things, to partner with Nigeria Air, the failed national carrier project.
The airline claimed that its request was standard procedure in international investment negotiations and that it had not broken any laws in the country or elsewhere.
This was stated in the airline’s defence against the suit filed by the Airline Operators of Nigeria (AON) as the second defendant in the case at the Federal High Court in Lagos.
Mr Wondwossen Beyene, the Country Manager of Ethiopian Airlines in Nigeria, swore to the 37-page document obtained by Entrepreneurng with the suit number FHC/L/CS/2159/2022.
The airline filed its defence on December 19, 2022, less than a month before the AON’s initial suit was to begin.
On January 16, 2023, the case will be heard at the Federal High Court in Lagos.
The airline declared that it bided for purchasing shares in the national carrier, just like other Nigerian shareholders. Part of the document said:
I believe as fact that the averments contained in paragraph 11B of the affidavit in support of the plaintiff’s originating summons are a distortion of the truth. The 2nd defendant did request tax incentives/concessions for the proposed fledging Nigerian airline, amongst other incentives, which is a normal international practice in international investment negotiations, and not against the law.
In any case, those requests were proposals and proposed during negotiations with the government and which the Federal Government was at liberty to accept or refuse. The plaintiffs have not shown any proof that the 2nd defendant obtained any tax incentives/concessions for the Federal Government of Nigeria.
The position of Ethiopian Airlines
The company also disagreed with the AON that its participation in the national carrier project would result in the loss of jobs for qualified Nigerians. Rather, the airline insisted that its investment in the project would benefit the Nigerian economy, ensure sector growth, and provide employment and assistance to Nigerian travellers.
Furthermore, Ethiopian Airlines claimed in its defense that it was unaware the project was part of a Public Private Partnership (PPP) scheme, insisting it was absolute.
The airline claims that AON, which sued it and other defendants, did not participate in the process. As a result, it was perplexed why AON challenged its emergence when it refused to bid on the project.
The carrier claimed that the federal government agreed to sell 95% of the shares while keeping 5%. The FG also invited 46% of Nigerian investors, with the remaining 49% going to an international airline.
The origin story
Entrepreneurng previously reported that Ethiopian Airlines requested a 15-year tax moratorium from the Nigerian government in its Commercial and Strategic Plan with the Federal Government on the new national carrier.
The document stated on page 43 in its Taxation Assumption that no formal analysis of the airline’s tax position had been performed and that for this document, it assumed that there were no withholding taxes on interest payments, insurance premiums, and dividends to shareholders.
However, it is assumed that since this is an investment of strategic nature, the government of Nigeria will provide utmost support for the realization of this project, including tax holidays for the airline during the formation period and initial years of operation, estimated to cover at least 15 years period.
Tax-related matters will be dealt with in detail during the final negotiations and conclusion of the shareholders’ agreement and the management contracts.
The airline said it expected to recoup its investment within the same 15 years period, which means that within this time, Nigeria Air would be exempted from charges and taxes, which do not apply to other domestic carriers.
