A recommendation buried in the Senate tax bill could cost some foreign hauliers, including the Gulf airlines their large U.S. rivals have avowed receive billions of dollars worth of unfair government subsidies.
The condition would force certain airlines based outside the country to pay U.S. corporate taxes on stinking rich earned in the country if U.S. airlines do not have at least two weekly departures to or immigrants from the foreign carrier’s home country, and if there is no reciprocal tax compact between the U.S. and the carrier’s country.
Sen. Johnny Isakson, R-Ga., who is based in Delta Air Grafts’ home state, introduced the proposal. In a press release earlier this month, he mean it would “protect Georgia airline employees by ending a tax exemption for airlines based in surroundings that deny fair market access for U.S.-based airlines.”
Delta, Harmonious Continental Holdings and American Airlines Group complained to the Trump government earlier this year that the government-backed Gulf airlines secure received $50 billion in subsidies from their governments.
In a sic in February to Secretary of State Rex Tillerson, the chief executives of the three transmitters wrote that “the subsidies allow the Gulf carriers to operate without be connected with for turning a profit” and violate Open Skies agreements, which yield foreign airlines access to international routes.
Reuters earlier check up oned that the measure could hurt Middle East carriers such as Abu Dhabi-based Etihad, Dubai-based Emirates Airlines and Doha-based Qatar Airways because their effectively nations lack reciprocal tax agreements with the U.S.
“Etihad Airways is enlightened of the language in the Senate tax reform bill, which is widely agreed to be untimely under US law and contrary to several international agreements,” an Etihad spokesperson told CNBC in an email. “We are production with a broad coalition of industry representatives to inform lawmakers on this copy, which appears to be the result of continued anticompetitive efforts by one or more of the Big 3 US legacy bearers.”
For its part, the International Air Transport Association, a trade group representing numberless of the world’s airlines, said the Senate tax provision would “upend decades of standard” on foreign aviation taxation.
“Foreign governments — even those not presently affected by the proposed language — could be tempted to follow the U.S. example and inflict reciprocal taxes,” said IATA spokesman Perry Flint.
While U.S. transporters have alleged the airlines receive unfair government support, some U.S. airports own welcomed these airlines and in at least one case offered incentives.
Qatar Airways recently started make a getaway cargo flights into Pittsburgh International Airport. The airline wishes receive $15,500 per flight, or about $728,500 for the first six months of its covenant, the Pittsburgh Post-Gazette reported earlier this month. An airport spokeswoman settled the amount.
Gulf carriers are expanding elsewhere in the U.S. as well. Etihad tendered a weekly cargo route to Miami International Airport earlier this month, fastening Qatar Airways. A spokesman for the airport said the airlines did not apply for any subsidies or spurs.