During the ALTA Aviation Law Americas, held in Buenos Aires, the role of tax policies in the competitiveness and sustainability of the airline industry was widely discussed. The “Taxation Challenges: Threats for the Airline Industry in Latin America”, moderated by Marcelo Guaranys, partner at Demarest Advogados, analyzed the proposal of the UN Committee on Taxation to change the current taxation model based on the country of residence, which taxes airlines in their country of origin, to a model based on origin, where taxes would be collected in all countries where revenue is generated.
Guaranys said it is important to maintain simplicity in taxation for airlines, since the sector has several specificities. “Due to the international nature of operations, the proposed measure could result in double taxation, both in the country of origin and destination, which would increase costs for airlines and, consequently, for engers. We need to ensure that aviation remains a competitive and accessible sector, without creating additional obstacles.”
Carlos Protto, Director of International Tax Relations at the Argentine Revenue Service, highlighted concerns about the structure of the UN Taxation Committee, where tax experts serve in a personal capacity, which could weaken the proposal. “We are seeking an appropriate balance between tax collection and creating an environment conducive to the growth of the aviation sector, highlighting the importance of adjusting global policies to combat tax evasion and promote tax justice,” he said.
According to data from the 2024 Competitiveness Index, carried out by ALTA and Amadeus, Argentina stands out for having the highest tax burden in the region on ticket sales, totaling 72% of the final price. In contrast, countries such as Brazil and Chile do not apply VAT to international tickets, which reflects a policy that is more favorable to the promotion of international air transport, highlighting the importance of maintaining competitiveness and accessibility.
Ligia da Fonseca, IATA’s Global Head of Tax Policy, highlighted the urgency of global tax harmonization: “The current UN Model Tax Convention minimizes unnecessary istrative and financial burdens for airlines, while promoting a stable tax environment to air connectivity, economic growth and social development.” Ligia expressed concerns about the possible revision of Article 8 of this model convention, which could result in double taxation of airline profits. The IATA representative also emphasized the importance of following existing international tax policies – approved by the UN specialized agency for aviation, the International Civil Aviation Organization (ICAO) – to avoid profound negative impacts on the aviation sector, especially in developing countries.
The resulted in a strong call for collaboration between governments, airlines and international organizations to create a harmonized tax system. The creation of a more integrated and efficient tax environment is seen as essential to strengthen competitiveness and ensure the sustainable development of aviation in Latin America.
Read also
- Thales to start repairing helicopters in Brazil from 2025
- Azul completes 14 years of operations in Teresina
- SITA announces essential protection for aviation network communications
Street: HIGH
