MOSCOW: Russian government has approved a bill to reduce 18 percent to 10 percent value-added tax (VAT) on domestic airlines.
The bill, which will change the country’s tax code, will be sent to the State Duma in the near future. The measure will be effective through Jan. 1, 2017.
Prime Minister Dmitry Medvedev said the initiative is necessary to improve the financial situations of Russian carriers. Last year, several Russian airlines faced significant difficulties due to economic and currency EXCHANGE RATES changes.
At the end of 2014, the Russian government pledged to support the struggling Transaero Airlines. UTair Airlines and Ural Airlines are also seeking government guarantees.
Russia’s international traffic was down 14.5% in January-February, while domestic passenger numbers grew 12.4%. UTair carried 691,834 passengers for the two-month period, down 33.6%. Transaero carried 1.42 million, down 5% year-over-year.