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Volume 14,Issue 3 Autumn 2012

Aviation Fuel Surcharges Exempt from Business Tax for 3 years


The Ministry of Finance issued a circular that airline fuel is to be exempted from business tax for 3 years. This would unburden aviation businesses by about 2.5 billion Yuan. "Legal Evening News," quoting mainland financial and taxation experts, estimate that it will allow the next two years after the Spring Festival and ticket prices to stabilize. ’08 Annual Paid Tax Refund Can Be Offset According to the Ministry of Finance, the business tax exemption is for the period 1 January 2008 to 31 December 2010, as credit could not pay for all the year’s sales taxes. The exemption is probably reduced for the end of 2008 due to the substantial downward adjustment of airline fuel surcharges for their loss at that time. The Development and Reform Commission and the Civil Aviation Authority issued a notice on 18 December 2008 that 800 kilometers or more per passenger route would go down from 150 Yuan to 40 Yuan (-73.3%); 800 kilometer following costing 80 Yuan per passenger would go down to less than 20 Yuan (-75%), well exceeding the 50-60% reduction that the market had expected. Helping Airlines Restabilize Fares A number of fiscal and tax experts say that the policy is for consumers, but allowing ticket prices to stabilize for the next two years after the Spring Festival.

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