NIGERIA Law and Practice Contributed by: Tamuno Atekebo, Chinasa Unaegbunam, Naomi Kabowei and Favour Osayuwamen, Streamsowers & Köhn
1. Aircraft and Engine Purchase and Sale 1.1 Sales Agreements 1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement Stamp Duty In Nigeria, the execution of an aircraft or engine sale agreement will attract stamp duties at an ad valorem rate of 1.5%. Capital Gains Tax The gains realised from the sale will be subject to capital gains tax. Capital gains tax at the rate of 10% arises on gains accruing to domestic parties upon the sale of an aircraft or engine. This tax also arises from the sale of ownership interests in Nigerian companies for proceeds in excess of NGN100 million. A roll-over relief exists where the proceeds from the sale of the aircraft or engine are used to purchase a new aircraft or engine within 12 months before or after the sale. For foreign sellers spending an aggregate of 183 days or more in Nigeria in the year of assessment, and for - eign companies managed and controlled from outside Nigeria during the year of assessment, capital gains tax will arise solely on any sums received or brought Where an aircraft or engine or other part is imported following a sale, it will be import-duty free. Notwith - standing the foregoing, the Finance Act 2023 imposes an additional 0.5% charge on goods (including air - craft) imported into Nigeria from outside the region. The Finance Act 2023 also mandates operators and lessors with income derived from Nigeria to file tax returns as a condition of continued operation. VAT is applicable on goods physically present in or imported into Nigeria. However, VAT will not arise where an aircraft or engine is for commercial purpos - es. These incentives do not apply to private aircraft. 1.1.2 Enforceability Against Domestic Parties It is advisable for a sale agreement to be profession - ally translated into English (the official language of Nigeria) where the sale agreement is not in English. into Nigeria. Other Duties
The sale agreement as translated should then be certi - fied and/or notarised in the applicable manner for that country. Nigerian courts will not enforce an agreement
made in a foreign language. 1.2 Transfer of Ownership 1.2.1 Transferring Title
The transfer of title of an aircraft or engine must be effected through a written agreement, and the parties to the agreement will specify the terms and conditions that must be met for title to pass to the buyer. This position also applies to all installed parts, such as an auxiliary power unit (APU). The sale of ownership interests in an entity that owns an aircraft or engine will be recognised as a sale of such aircraft or engine once it is agreed in the sale instrument that all the interests in such entity are being acquired. 1.2.2 Sales Governed by English or New York Law A transfer instrument, such as a bill of sale, may spec - ify that it is governed by English or New York law. Such clauses are recognised and enforced by Nige - rian courts, provided that the terms and basis of the agreement are not contrary to public policy, tainted with fraud or in any way illegal. The minimum substantive requirements for such a bill of sale will be akin to the minimum requirements for a valid contract. These include: • the correct identification of the parties (ie, the seller and the buyer); • the consideration for the sale; • a precise description of the aircraft or engine or other part being sold; • the date of the transaction; and • the signatures of the parties. 1.2.3 Enforceability Against Domestic Parties A bill of sale, if executed in a language other than the Nigerian official language (which is English), should be translated into English. It should be certified or notarised, particularly if the document is to be ten - dered in a court proceeding.
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