Latin airlines face US tax probe

The tax could generate "an international chaos," said AITAL.

Latin American airlines are facing a tax probe in the US, the Latin American Airline Association (AITAL) has said.

The US probe is trying to establish if the airlines owe taxes on salaries for crew members for time spent flying over US territory and pre-flight services.

AITAL warned that the measure could be extending to carriers from other regions such as Europe or Asia.

A spokesman for the federal Internal Revenue Service (IRS) in Dallas has confirmed the probe.

The spokesman explained that under tax law, money earned by non-resident alien flight crews while over or on US territory is subject to US federal income tax, unless when exempt by treaty or specific code provisions.

He added that this is applied whether the non-resident alien is employed by a US or foreign air carrier.

The office in Dallas has begun the probe, but the spokesman, who asked not to be named, said it was an IRS-wide initiative.

Alex de Gunten, executive director of AITAL, said his organisation was now working with the International Air Transport Association (IATA) to determine what action to take.

Retaliation

He said that the IRS probe goes against international agreements.

It has no sense, this law is not applying to cruisers or lorry drivers that go temporarily through the US, it is discriminatory Alex de Gunten, AITAL

Four Latin American airlines, one of them thought to be LanPeru, are being contact by the IRS to provide data from as far back as 1995.

"It has no sense, this law is not applying to cruisers or lorry drivers that go temporarily through the US, it is discriminatory," said Mr de Gunten.

He added that the situation could spark retaliatory actions from other countries, which could apply the same charge over US pilots.

"It could generate international chaos."

'Unbelievable'

A senior US airline executive has expressed to the Financial Times the same fear.

"They are firing a bullet at our own industry. It is really unbelievable," he added.

The executive director of AITAL said measures such as this did not contribute to the recovery of its industry, "which was going through difficult times."

He added that all legal and political measures would be adopted by AITAL and IATA to put an end to the situation.