RUBAA Courts Controversy Over Large Bizjet Tax

 - September 28, 2012, 1:55 PM
Russian United Business Aviation Association officials said that Russian import taxes on larger business jets should be retained. Seen here at a Jet Expo press conference (left to right): RUBAA vice president Eugeny Bakhtin, executive director Anna Seryezhkina, president Valery Ochirov, and chairman Alexander Kuleshov. (Photo: Vladimir Karnozov)

Having achieved some success in lifting import taxes for some foreign-made business aircraft, the Russian United Business Aviation Association (RUBAA) has said it will not lobby to eliminate duties for aircraft weighing more than 20 metric tons (44,000 pounds) operating empty weight (OEW). The decision, which is likely to frustrate Western aircraft manufacturers, was announced this week during Jet Expo 2012 in Moscow. The group said it will continue efforts to ease importation of aircraft with OEWs of less than 20 metric tons because it considers these to be important for economic development in Russia, where local manufacturers produce no equivalent-sized jets.

Russian customs authorities charge 20-percent tax on imported fixed- and rotary-wing aircraft with an OEW less than two metric tons and more than 20 metric tons. The Russian government’s reason for keeping the duties on larger airplanes–such as the Airbus Corporate Jet and Boeing Business Jet families, as well as the Gulfstream G650 and Bombardier Global 6000–is the perceived need to protect local manufacturers of aircraft such as the VIP versions of the Ilyushin-96, and Tupolev-204/214, as well as the planned Sukhoi Business Jet that is based on the new Superjet 100.

RUBAA president Victor Ochirov accepted that the tax has resulted in somewhat unequal conditions for business jet manufacturers in the Russian market, but he said he is not supportive of removing the tax because of unspecified “other considerations.” Association vice president Eugeny Bakhtin elaborated on RUBAA’s position: “I think that those super-heavy business jets [weighing] in excess of 20 [metric] tons are some sort of luxury items…it is a lot more urgent a matter for this country to ease or remove import duties on small airplanes for general aviation. The current taxation policy in this market retards Russia’s economic development and fleet renewal. Those who buy a Gulfstream 650 or other super-luxury aircraft, they will do so regardless of taxes; they will find the money to pay all duties.”

RUBAA chairman Alexander Kuleshov told reporters that he was more concerned about taxes on spare parts and technical services for Russian-registered business aircraft outside the country. Although only around 5 percent, the procedure for payment is very complicated and takes time, he said. “Therefore, many aircraft owners now say, ‘Well, I had better register my aircraft abroad, so not to have all these troubles with keeping it airworthy.’” This keeps a large number of business aircraft actually owned by Russians on foreign registers. “Today, keeping a Russian-registered business jet airworthy is more expensive. So we will continue our efforts aimed at improving the situation,” concluded Kuleshov.