Russia’s ministry of economic development has proposed eliminating value added tax (VAT) on all purchases of aircraft, according to a report in Russian business daily Vedomosti. VAT is currently charged at 18% in Russia, with a further import tax of 20%.

“Russian airlines and aircraft builders have been limited from the beginning by VAT,” says the ministry’s Maxim Medvedkov.

The proposed VAT cut would allow Russian airlines to renew their ageing fleets and would boost domestic aircraft production, the report says. Aeroflot may have lobbied hard for the move as it is negotiating to buy 22 Airbus A350s or Boeing 787s worth around $3 billion.

Source: Flight International