Airlines demand tax exemption on aircraft purchase

The Aviation Operators Association of Bangladesh (AOAB), a platform of the country's private air operators, today demanded tax exemptions on the purchase of aircraft, helicopters and their parts.

The organisation said these taxes were not sustainable for the country's fragile aviation sector to survive.

The AOAB demanded withdrawal of four types of taxes imposed on this sector.

The organisation cited these demands at its pre-budget proposal for the financial year 2023-24 during a meeting with the National Board of Revenue.

A letter containing the proposal was provided by Mofizur Rahman, secretary general of the organisation and managing director (MD) of NovoAir.

In the letter, he said, "Buying helicopters and their parts is very expensive at present. Tax imposed on it is 5 per cent, advance tax is 5 per cent, advance income tax is 5 per cent. Taxes on these sometimes exceed 100 per cent."

"These taxes put undue financial pressure on the airlines. There is a tax rate of 26 per cent depending on the type of aircraft parts. Earlier, these duties were not required to be paid," he said.

Demanding withdrawal of a 15 per cent value added tax imposed on fuel used in operating domestic flights, the AOAB said fuel prices in the country's aviation sector were higher than that in the international market.

Many countries in the world do not differentiate between domestic and international flights. Even India has reduced the tax on fuel for domestic flights after a rise in fuel prices, said the letter.

Demanding an overall tax cut on travel on domestic flights, the AOAB said higher tax rates take ticket prices beyond the reach of passengers and their numbers decrease. In this case, the AOAB demanded to reduce the total tax from Tk 725 to Tk 225.