“Gulf airlines face increased tax burden under Senate bill”

A provision included in the Senate tax reform bill, proposed by Senator Jonathan Isakson, would open the door for the U.S. to impose corporate income taxes on select foreign airlines. This measure would primarily affect airlines based in the Gulf region, such as Emirates, Etihad, and Qatar Airways. U.S. legacy carriers have been lobbying for this change for almost three years, claiming that the Gulf carriers have received $50 billion in state subsidies since 2004 and are violating international aviation agreements. Currently, foreign airlines are not required to pay taxes for routes that make stops in the U.S., in order to avoid double taxation. However, the new proposal would eliminate this exception for airlines based in countries or territories without a tax treaty with the U.S., and where U.S. airlines only fly twice weekly. According to the Wall Street Journal, this would impact 14 countries and territories, including Qatar, United Arab Emirates, and others. This provision would cost foreign airlines an estimated $200 million over the next 10 years, and has drawn criticism from both sides. The Partnership for Open & Fair Skies, representing the Big Three U.S. airlines and industry unions, has not commented on the proposal, while U.S. Airlines for Open Skies, representing JetBlue, Hawaiian, and cargo carriers, is opposed to it. Etihad has stated that the proposal goes against international agreements and is anti-competitive. Critics have pointed out that the proposal’s sponsor, Senator Jonathan Isakson, is from Delta’s home state of Georgia. However, the senator has stated that the goal of tax reform should be to create a level playing field for American businesses and that foreign airlines should not receive preferential tax treatment if their countries do not open their markets to U.S. companies. The International Air Transport Association (IATA) has also expressed concerns, stating that this provision could lead to other countries imposing reciprocal taxes on U.S. airlines. The fate of this proposal rests on its inclusion in the final tax reform bill, which would have to be passed by both the Senate and the House of Representatives.”