US: Gulf carriers may be in focus under foreign airline US tax exemption cut

A US congressional proposal that would eliminate income tax exemptions for certain airlines could affect major Gulf carriers, potentially worsening an international spat between US airlines and their Middle East rivals. US airlines have been petitioning the federal government for years to intervene in what they see as unfair competition by the three major Gulf carriers. The proposal, tucked deep in the Senate tax-cut plan, calls for airlines headquartered in foreign countries to pay the US incorporate tax rate if: 1) the carrier’s home country does not have an income tax treaty with the United States and 2) the carrier’s country of origin has fewer than two arrivals and departures, per week, operated by major US airlines. Airways, Emirates and Etihad Airways have for years been accused by US competitors of being illegally subsidized by their governments. The Gulf carriers deny the accusation. They could not immediately be reached for comment on Thursday. If the proposal passes, it could leave the Gulf carriers more vulnerable because their home countries – the United Arab Emirates and Qatar – do not have income tax treaties with the United States, according to the Internal Revenue Service website.<br/>