Airlines in Latin America are upset by two new US rules that make it harder and more expensive to operate in the USA. The US Transportation Security Administration (TSA) now requires Latin American pilots to undergo processing before they can obtain training with the USA. The TSA has placed Latin America into Category 2, which requires pilots to reapply for certification before training. The necessary application and fingerprinting could cost up to $180 and delay training from five to 30 days.

The US Internal Revenue Service (IRS) has also decided to apply a long-moribund rule under which, in the absence of reciprocal tax treaties, income earned by foreigners working temporarily in the USA is subject to US income tax. Mexico and Venezuela are the only Latin American countries with such treaties.

The IRS has begun audits of several Latin American carriers to see if they are withholding US income taxes from employees who spent time working in the USA on flights to and from Latin America. The IRS claims that time spent at a US base in pre-flight briefing, flight preparation, and working aboard a flight while in US airspace is subject to US income tax. So far, the IRS has not announced its position on the tax liability of foreign airlines that overfly but do not land in the USA.

"It has become such a nightmare to do business in the United States," says Alex de Gunten, executive director of AITAL, the association of Latin American international airlines. He says the new rules are discriminatory because the IRS is not claiming that foreign cruise ships serving US ports owe any income tax.

The new pilot certification rule is "punitive", says de Gunten, because US airline pilots may come from any country but are not subject to the same requirements.

Source: Airline Business