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Airlines to receive tax exemption on fuel surcharges
By Winny Wang |
January 8, 2009, Thursday
|
Online Edition
Online Edition
CHINA will exempt a business tax on airlines' fuel surcharges for three years as part of the country's efforts to protect the domestic aviation industry from an economic downturn.
Domestic carriers needn't pay a 3 percent tax imposed on fuel surcharges for domestic flights from January 1, 2008, through the end of 2010, the Ministry of Finance said on its Website yesterday.
"The exemption is expected to save airlines a total of 300 million yuan, but won't greatly improve their performance," said Li Lei, an analyst of China Securities Co.
"China Southern Airlines may save 130 million to 150 million yuan from the tax exemption as it runs more domestic routes than other carriers, while Air China and China Eastern Airlines may save 70 million to 80 million yuan each," Li said.
The move is part of China's measures to bolster the sagging aviation market. The Civil Aviation Administration of China said it would waive several fees and taxes that airlines would have had to pay.
"Domestic carriers will benefit more if the regulator suspends the collection of infrastructure funds, which will save them a total of 4 billion yuan," Li said.
The National Development and Reform Commission last month lowered domestic jet fuel prices from 7,450 yuan a ton to 5,050 yuan, a move that will save domestic airlines dozens of billions of yuan a year.
On the heels of the reduction, the commission announced it would slash fuel surcharges from December 25. Surcharges for routes shorter than 800 kilometers will be slashed to 20 yuan from 80 yuan, and for long-haul flights, the fees will decrease to 40 yuan from 150 yuan.
Domestic carriers needn't pay a 3 percent tax imposed on fuel surcharges for domestic flights from January 1, 2008, through the end of 2010, the Ministry of Finance said on its Website yesterday.
"The exemption is expected to save airlines a total of 300 million yuan, but won't greatly improve their performance," said Li Lei, an analyst of China Securities Co.
"China Southern Airlines may save 130 million to 150 million yuan from the tax exemption as it runs more domestic routes than other carriers, while Air China and China Eastern Airlines may save 70 million to 80 million yuan each," Li said.
The move is part of China's measures to bolster the sagging aviation market. The Civil Aviation Administration of China said it would waive several fees and taxes that airlines would have had to pay.
"Domestic carriers will benefit more if the regulator suspends the collection of infrastructure funds, which will save them a total of 4 billion yuan," Li said.
The National Development and Reform Commission last month lowered domestic jet fuel prices from 7,450 yuan a ton to 5,050 yuan, a move that will save domestic airlines dozens of billions of yuan a year.
On the heels of the reduction, the commission announced it would slash fuel surcharges from December 25. Surcharges for routes shorter than 800 kilometers will be slashed to 20 yuan from 80 yuan, and for long-haul flights, the fees will decrease to 40 yuan from 150 yuan.
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