Gulf airlines furious about proposed US tax reform
The United States Senate will begin considerations of a new tax bill after Thanksgiving. The controversial bill received mixed opinions at home, but foreign carriers with Gulf airlines at the forefront have become the most vocal opponents as they fear the bill will compromise the competition conditions.
“America first”, the US Presidential election slogan, appears to be transferred into the tax reform currently underway in the US Senate. Among other things, the reform foresees that overseas carriers should pay the US corporate tax rate, if the carrier’s home country does not have a standing tax treaty with the US or if they operate less than two US-bound flights per week.
Abolishing the exemption from corporate tax for foreign airlines would affect carriers from various countries such as Singapore or Serbia, but so far, the Gulf carriers have been the most severely critics. United Arab Emirates and Qatar ─ the home countries of Emirates, Etihad Airways and Qatar Airways ─ do not have tax treaties with the United States.
Etihad Airways said the bill is a result of “anti-competitive efforts” by the three United States legacy carriers. “Etihad Airways is aware of the language in the Senate tax reform bill, which is widely agreed to be inappropriate under US law and contrary to several international agreements,” an Etihad spokesman told the Financial Times. “I am afraid that many countries will see what the US is doing and will follow suit”.
The Arab Air Carriers Organisation (AACO) which represents a network of 30 Arab carriers including Etihad Airways, used even stronger language to describe the bill.
“The notion of imposing an income tax on foreign carriers belongs to the first half of the last century, not today’s globalised world,” Abdul Wahab Teffaha, secretary-general of AACO told the National. “We have communicated with the International Air Transport Association (IATA) and the United Nations’ International Civil Aviation Organization (ICAO) on the matter and are talking to other stakeholders and governments, as this could be very dangerous.”
American Airlines, along with Delta Air Lines and United, are in ongoing dispute with Gulf carriers over the alleged violation of the Open Skies agreement. US carriers claim that the Middle Eastern airlines are receiving illegal subsidies from their respective governments that help sell tickets at lower prices thus creating an unfair competitive edge.
Source – AeroTime