New U.S. Tax Exemption Cut Targets Gulf Airlines

The already controversial so-called ‘Tax Cuts and Jobs Act’ has many different features including one that could impact Gulf airlines like Emirates, Etihad and Qatar Airways, according to airlines/gulf-carriers-may-be-in-focus-under-foreign-airline-u-s-tax-exemption-cut-idUSKBN1DH04H”>Reuters.

Georgia’s Republican Senator Johnny Isakson has included an amendment that he says will offer major tax cuts for “hardworking Americans.” The amendment will force certain airlines to pay U.S. incorporate tax if specific conditions are met. According to Isakson, the amendment is designed to “protect Georgia airline employees” because of foreign airlines that “deny fair market access.”

Isakson’s proposal states that if two conditions are met, then foreign airlines would no longer benefit from a U.S. tax exemption. The conditions apply if, one, the airline’s home country doesn’t have an income tax treaty with the U.S. and two, if the airline’s home country has fewer than two departures and arrivals from American carriers per week.

According to the Inland Revenue, neither the UAE or Qatar have a tax treaty in place with the U.S. which means that no American airlines fly to the region after Delta pulled flights due to “unfair, anti-competitive practices” by Emirates, Etihad and Qatar.

If the proposal passes, it would have significant impact on the so-called ME3. So far, the Trump administration has been reluctant to pass such measures, although the “Laptop Ban” did have consequences for Middle Eastern airlines. US airlines have been pressuring Trump to pass measures that help “level the playing field” when it comes to competition with the ME3.

Isakson is the Senator for Georgia, where Delta Air Lines is based and Atlanta’s airport has been named as the busiest airport in the world in selected studies.

On the other hand, not everyone is as convinced as the Senator that foreign airlines are bad for Americans. Qatar launched a public campaign reminding people that the airline offers over 100,000 jobs and helps support the US tourism industry by flying millions of visitors in each year.

Other Middle Eastern airlines have made similar claims and Boeing is a fan as Emirates recently purchased numerous numbers of its planes recently.

 

[Image: Shutterstock]