Ukraine's legislature is intending to aid its domestic aviation industry by imposing value-added tax on selected imported foreign aircraft types.
A bill, approved by the nation's parliament in the first reading, proposes to eliminate "preferential terms of import" of Western passenger aircraft with 50-100 seats.
If adopted, the legislation would cancel a clause in the tax code which allows airlines to bring in such aircraft without paying 20% VAT if they use them for less than one year.
Legislators are arguing that tax concessions affect price competitiveness of the Antonov An-140 and An-148/158.
"Our carriers routinely return their Western-built aircraft before one year expires and then bring them back again tax-free," says parliamentary member Vyacheslav Boguslayev, who heads Zaporozhye-based engine manufacturer Motor-Sich.
"Over the past year, around 80 aircraft with various capacities have been re-imported under that scheme. It is used by all domestic airlines, including AeroSvit and Ukraine International."
Antonov vice-president Alexander Kiva says the airframer fully approves of the lawmakers' initiative. He adds: "We believe the state should support domestic producers or at least create a level playing field for all competitors."
But there are misgivings about efficiency of the move among Ukranian airlines which have expressed doubt that domestic aircraft industry could meet their fleet renewal and expansion needs shortly.
Antonov built no An-140s and only two An-148s last year. Kiva says it plans to produce eight An-148s in 2012 and up to 12 in 2013.