The United States Congress has issued a bill to simplify the Internal Revenue Code of 1986, the “Tax Cuts and Jobs Act of 2017“. This bill will effectively alter the rate of taxation for individuals and businesses. It is the major tax reform advocated by the Trump administration. And one tax provision will have a disadvantageous effect on the three big Middle East carriers (ME3: Emirates Airlines, Etihad Airways and Qatar Airways).
Georgia’s Republican Senator Johnny Isakson has included an amendment that will force certain international airlines to pay U.S. incorporate tax if specific conditions are met. In cases where “the country where the foreign airline is headquartered doesn’t have a tax treaty with the U.S., and if major U.S. airliners make fewer than two weekly trips to that foreign country“.
The United Arab Emirates nor Qatar have a tax treaty in place with the U.S. while none of the American airlines flies to that region after American Airlines, United Airlines and Delta Air Lines stopped flying there due to “unfair, anti-competitive practices by the ME3 carriers“.
If the proposal passes it would have a big impact on the ME3, a coalition of U.S. airlines and different U.S. organisations have been lobbying hard to pass measures to restore and to protect a level playing field for U.S. aviation.
Source: Tax Cuts and Jobs Act of 2017