Ethiopian Airlines has voiced its apprehension regarding the United Nations’ proposed tax reform for the aviation industry, stating that it could have severe repercussions on the sector.
The airline’s CEO, Mesfin Tasew, expressed concerns about the potential consequences of the reform during the 12th Aviation Stakeholders Convention held in Addis Ababa.
The UN tax reform proposal revolves around revising the double taxation law, which suggests that airlines should pay taxes in all the countries they operate.
This proposition has raised alarm in many nations, with industry experts warning that it may not only harm the aviation sector but also lead to the withdrawal of airlines from the market.
Speaking to journalists at the convention, CEO Mesfin Tasew highlighted that the UN’s tax reform could pose a significant threat to the very existence of the aviation sector.
If implemented, airlines could be forced to exit the market or substantially increase ticket prices for passengers.
This, in turn, would likely result in declining passenger numbers and reduced revenue for countries.
The recent discussions within the United Nations Tax Committee regarding the tax on income from international shipping and air transport, in line with Article 8 of the UN model, have further fueled concerns among industry stakeholders.
The 12th Aviation Stakeholders Convention, held from May 12th to 15th, brought together over 500 representatives from the aviation industries across Africa, Europe, the Middle East, Asia, and North America. The event served as a platform for deliberating and finding solutions to expedite the development of air transport in Africa while fostering cooperation among participating nations.
Mesfin emphasized the importance of accelerating air travel services in Africa and improving African airlines’ ability to enhance their foreign exchange reserves. This would facilitate bank loans, aircraft payments, spare parts purchases, and maintenance service payments.
The convention also aimed to create growth opportunities and foster discussions on the advancement of the aviation industry in Africa. The African Airlines Association (AFRAA) highlighted the meticulous program of the convention, which aimed to achieve results that promote a successful and sustainable aviation industry on the continent.
Furthermore, the CEO stressed the need for policy formulation to facilitate the growth of African aviation. This includes encouraging competition in aviation services, liberalizing traffic rights, reducing tax burdens, and streamlining business operations through strategic investments in aviation infrastructure such as airports, maintenance facilities, and aviation training academies.
As the debate surrounding the UN’s proposed tax reform continues, the aviation industry and stakeholders are closely monitoring the situation, hoping for a solution that strikes a balance between revenue generation and the sustainable growth of the sector.
