Bloomberg News

Russia to Slash Import Tax on Boeing and Airbus Passenger Jets

January 18, 2007

Russia's tariff commission agreed to cut import taxes in half for the most popular passenger planes made by Airbus SAS (EAD) and Boeing Co. (BA:US), aiding efforts by the rivals to expand in one of the world's fastest growing airline markets.

The commission approved slashing charges to 8 percent on aircraft with fewer than 50 seats and to 10 percent for planes with 115 to 160 seats, an aide to Economy Minister German Gref said. The tax now is 20 percent of a plane's value.

``Airlines are growing, traffic is up, more planes are needed and Russian aircraft producers haven't made a timely offer,'' the aide, Igor Konkov, said by phone in Moscow today. The commission, which will submit its proposal to the government for approval today, is also considering ending the 18 percent value-added tax on imported jets, Konkov said.

Russia's 180 airlines, including state-run OAO Aeroflot, eastern Europe's biggest, are seeking to modernize Soviet-era fleets amid surging travel demand in an economy expanding for a ninth year. Lowering aircraft taxes was one of the concessions Russia made last year when it won U.S. backing to join the World Trade Organization, which it has been trying to do for 15 years.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net.

To contact the editor responsible for this story: Lars Klemming at lklemming@bloomberg.net.


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