Aviation operators want tax waivers on aircraft, parts, fuel
AOAB proposes a reduction of total tax by Tk225 to fix affordable airfares for passengers
Aviation Operators Association, Bangladesh (AOAB) has urged the government for waivers of advance tax levied on imports of aircraft, engines, parts, and fuel, value-added tax (VAT), and advance income taxes.
In a pre-budget talk with the National Board of Revenue on Tuesday, leaders of AOAB put forward their written proposals for a waiver of 5% advance tax (AT) on the import of aircraft, 5 percent advance tax (AT) on the import of aircraft parts and 5% advance income tax.
"Procuring an aircraft is highly expensive. Moreover, imposing a 5% advance tax on aircraft import creates an extra burden and pushes up operational costs of businesses," Mofizur Rahman, secretary-general of AOAB told The Business Standard.
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"Combined with the 5% advance tax on expensive components and the 5% advance income tax on certain components the overall tax rate exceeds 100% in some cases," he added.
The association said currently, a total tax rate of 26.20% exists varied by engine type. Those were previously released at zero import duty. "Therefore, we proposed the withdrawal of all import duties, VAT, advance tax, and advanced income tax levied on engine types and reinstatement of zero duty," the AOAB secretary-general said.
Meanwhile, aviation operators said aviation fuel in Bangladesh is overpriced compared to the international market. VAT is levied on it at the rate of 15%.
So, they demanded the withdrawal of VAT on domestic flight fuel.
"In most countries of the world, there is no difference in fuel prices for domestic and international flights. Even neighbouring India has reduced taxes to 1% for the public interest," Mofizur Rahman told TBS.
Meanwhile, it has been proposed to fix miscellaneous charges and various taxes to Tk500 from Tk725 per passenger.
Passengers of domestic flights have to pay about 25% tax on the airfare, the AOAB leaders said.
"Other modes of transportation do not have such a high tax rate. For higher fares, ticket prices go beyond the affordability of passengers, resulting in a decrease in the number of passengers. Ultimately, it lowers overall tax collection from the aviation sector," reads a written proposal.
Therefore, the AOAB has proposed a reduction of the total tax by Tk225 to fix affordable fares for passengers.
