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Tax To Latin American Airlines Going To The US?  
User currently offlineKLM685 From Mexico, joined May 2005, 1577 posts, RR: 19
Posted (9 years 4 months 1 day 4 hours ago) and read 5239 times:

Hey guys, I was reading the newest Avion Revue (june 05) and I was reading this article about the United States government charging a special tax for Latin american airlines going to the US.

It says this tax comes from the salary of the crew members and could go up 25% of it. The first airlines to be charged are from Brasil, Chile, Costa Rica, El Salvador, Guatemala, Perú and Panamá (which they were chosed in a very discriminately way). But they say that this will keep on with the rest of the airlines.

Most affected will be, of course, Mexican airlines which have several flights per day.

It also says that the IATA and the AITAL opposed firmly to this measure from the american government "trying to improve their profits". It also says that the Latin American countries my apply the same measure as reciprocity with the States.

For me this just sounds like pure BS. This is not the best magazine, so I would like to know if you know something about this and what are your opinions.



Cheers

Alonsou
(muito motivado!)


KLM- The Best Airline in the World!
21 replies: All unread, jump to last
 
User currently offlineA300AA From United States of America, joined Sep 2004, 394 posts, RR: 0
Reply 1, posted (9 years 4 months 1 day 4 hours ago) and read 5216 times:

I've heard exactly the same from F/A s coming from Bolivia, I thought it was
bs, but now the rumor is growing.


User currently offlineMexicana757 From United States of America, joined Apr 2001, 3043 posts, RR: 28
Reply 2, posted (9 years 4 months 1 day 4 hours ago) and read 5198 times:

If this rumor is true, does anyone know why only countries from Latin America are charge this tax?

This tax sounds unfair if only airlines from one part of the world are getting charged this tax. The countries whose airlines are getting this dumb tax should do the same thing to the U.S. airlines that fly into their countries.


User currently offlineLegacy135 From Switzerland, joined May 2005, 1052 posts, RR: 26
Reply 3, posted (9 years 4 months 1 day 4 hours ago) and read 5190 times:

If this comes true I really can't understand what the strategies of the US is. I remember a time, if somebody from the US came, people said "whoaoooo, you are from the States" now it's more and more like "uffff, you are from the Sates:"
There came so many things up doing bad basically to the US itself, I hope one day they come back to be reasonable, it would be so nice, as the US are a wonderful country.


User currently offlineHR001 From Honduras, joined Nov 2004, 303 posts, RR: 2
Reply 4, posted (9 years 4 months 1 day 4 hours ago) and read 5187 times:

The Tax is not for the Airlines it´s for the crewmembers it and it is a sort of income tax applied to the wages that crew members earn while on US soil and airspace. Our countries should apply the same measures to US crews if this applies with all the US carriers flights to Latin America it can be good "business" for our countries.

User currently offlineDutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 57
Reply 5, posted (9 years 4 months 1 day 3 hours ago) and read 5181 times:

This is very unclear, sorry.

How can a US tax be applied only to employees of Latin American airlines while they are working in the US? Does the tax specifically target Latin American airlines and their crew members? Doesnt seem right, will employees of Japanese and European and other foreign carriers be taxed as well? And, is this tax limited to airline employees only or all employees when doing business in the US? For example, if a Brazilian business woman goes to the US and does business for her company for a 3 day period, will she have to pay this US income tax for the 3 days that she was in the US? How is she different from a pilot flying a Varig jet into the US?

Can the US isolate specific types of employees from specific countries for certain taxation? I dont think we are getting the whole story here and more info is needed.


User currently offlineLegacy135 From Switzerland, joined May 2005, 1052 posts, RR: 26
Reply 6, posted (9 years 4 months 1 day 3 hours ago) and read 5184 times:

Quoting HR001 (Reply 4):
The Tax is not for the Airlines it´s for the crewmembers it and it is a sort of income tax applied to the wages that crew members earn while on US soil and airspace

How do they want to administrate this? Do they want to the crewmembers to fill out a tax declaration? A tax can only be fair if you can deduct those amounts from you need to do your job. So if a crewmember is going to spend some money during it's stay in the US as he/she needs to live as well, will they deduct his??? It sound like a real great BS idea to me and I hope they leave it as it is.
If not I would like to highly motivate all LatAm countries to do exactly the same to them. Otherwise they will never learn


User currently offlineCarmenlu15 From Guatemala, joined Dec 2004, 4762 posts, RR: 30
Reply 7, posted (9 years 4 months 1 day 3 hours ago) and read 5179 times:

One word: Discrimination!!!  hissyfit 

I searched for more info but found nothing... maybe I need to improve my Googling skills Big grin

I´m wondering, does the article mention what would be the use for that tax (i.e. airport security)?

My guess is, if this turns out to be true, then airlines would have to recover their money from other sources, say, ticket prices... What do you think about it?

Quoting Mexicana757 (Reply 2):
The countries whose airlines are getting this dumb tax should do the same thing to the U.S. airlines that fly into their countries.

Yes, we should. But doing so may bring a reduction in pax traffic from the U.S., with a negative effect on tourism--something most of our countries just can't afford.

 twocents 



Don't expect to see me around that much (if at all) -- the contact link should still work, though.
User currently offlineLaxintl From United States of America, joined May 2000, 25532 posts, RR: 50
Reply 8, posted (9 years 4 months 1 day 3 hours ago) and read 5166 times:

There was a long discussion here several weeks ago.

The abridged version of the story is that any income earned in the United States is subject to US Income taxes.
With the exception of countries that have formal tax treaties with the United States (majority of Latin America does not), their citizens are thus accordingly subject to having a percentage of their income fall under US tax laws.

Many Latin American airline have crews that spend hundreds of days(sometime even enough to make the US their legal tax home) in the US either on layovers, or flying to/from earning an income within the US borders without paying a penny in income taxes.

A partial reason behind this IRS enforcement action is a desire by the US to have many of these Latin countries enter into formal tax treaties like most of Europe and Asia with the US. Treaties would make money laundering and the flows of money for the drug trade easier to uncover and trace. Another reason is the ability to recover cost from country of origin for cost of providing social benefits to citizens of other countries that come to the US and become a burden on the state.

The few Latin countries that do have tax treaties with the US are not subject to this IRS action, as the governments credit revenues and cost between each other as needed.



From the desert to the sea, to all of Southern California
User currently offlineEddieDude From Mexico, joined Nov 2003, 7587 posts, RR: 43
Reply 9, posted (9 years 4 months 1 day 1 hour ago) and read 5140 times:

Quoting Laxintl (Reply 8):
exception of countries that have formal tax treaties with the United States (majority of Latin America does not

I guess then that crew members who are resident in Mexico for tax purposes then do not need to worry since Mexico and the U.S. have a treaty to avoid double taxation in effect.

As Mexicana757 said, such a similar measure should be instituted by the countries of the affected employees. Nothing prevents it from an international reciprocity point of view.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineLaxintl From United States of America, joined May 2000, 25532 posts, RR: 50
Reply 10, posted (9 years 4 months 1 day 1 hour ago) and read 5130 times:

The only Western Hemisphere countries that have current Tax treaties with the United States are Barbados, Jamaica, Mexico, Trinidad and Venezuela.
In addition if the Central America Free Trade Agreement passes then those member counties would enter into Tax treaties with the United States.

This IRS enforcement action did spring up from no place. As far back as the late 1990s, this issue had been brought up amongst in inter governmental discussions. Finally in 2003 the IRS issued its proposed rule making order which took affect this year.

Quoting EddieDude (Reply 9):
As Mexicana757 said, such a similar measure should be instituted by the countries of the affected employees. Nothing prevents it from an international reciprocity point of view.

Certainly foreign countries are free to tax or impose some sort of counter measure against this US law, however I would venture to state those countries would likely loose more via any punitive action then they could possibly gain.



From the desert to the sea, to all of Southern California
User currently offlineEddieDude From Mexico, joined Nov 2003, 7587 posts, RR: 43
Reply 11, posted (9 years 4 months 1 day ago) and read 5110 times:

Quoting Laxintl (Reply 10):
those countries would likely loose more via any punitive action then they could possibly gain

Maybe so, but under the reciprocity principle that governs relationships between foreign countries it would be only fair. Which reminds me of Brazil's fingerprinting of U.S. citizens. Is that still happening? I was in Brazil recently but I did not see anything probably because there were no U.S. visitors ahead of me in the foreigners' line.



Next flights: MEX-GRU (AM 77E), GRU-GIG (JJ A320), SDU-CGH (G3 73H), GRU-MEX (JJ A332).
User currently offlineTACAA320 From , joined Dec 1969, posts, RR:
Reply 12, posted (9 years 4 months 1 day ago) and read 5108 times:

Not quite long ago, there was a post regarding a "labor" problem with Copa Airlines employees in Panama City due to this tax. They were requesting a raise on their salaries.

User currently offlineIkramerica From United States of America, joined May 2005, 21534 posts, RR: 59
Reply 13, posted (9 years 4 months 1 day ago) and read 5098 times:

Did anyone who jumps on the "condemn the US" bandwagon bother to find out if other nations have the same deal, or why this might be true? I mean, it was absolutely obvious to me when it said "tax on crew." It was obviously a tax on income earned in the US, just like US citizens are taxed for income earned in other countries around the world.

It's so easy to cry discrimination than to understand the truth. You are not being treated differently in a material way than anyone else, but because your governments make it ridiculously difficult for the US to collect what they are rightfully allowed to charge (like any sovereign nation), the US must make special provisions for how to collect this tax.

If I were to work in England, Japan, Australia, Brazil, etc., I would be required to pay local taxes on what I earn there. It is not a crime to ask me for this. I am using your resources while there. I would expect that if someone were robbing me, the police would try to help. I use the roads and transit systems, the infrastructure. Whether it is a layover or six months, for the time you are here (or I am there), it's the same. This tax is deductible on my federal US return, and should be the same way in Latin American countries. If this isn't the case there, then who's fault is that?

And Legacy135, your anti-Americanism is nauseating. Please study up on Swiss regulations before you condemn the US and try to teach us a lesson. You tax non-nationals at the local rate for all work performed in Switzerland. These taxes are deductible here in the US, so we are not double taxed, and the same holds true in reverse. You tax everyone like that, just as the EU does, just as the US does. I have no idea how you handle flights from countries that aren't party to a treaty (if there are any), but to condemn the US for bothering to enforce a law and a right that every nation has the right to excercise is baseless.

And if you want to talk about profiting unfairly on the backs of others, just look within. Switzerland is not blameless. When I was in Switzerland in 1997 (or was it 98), your country was all abuzz because the US dared demand your neutral nation return the millions upon millions it stole from Jewish refugees escaping Nazi Germany and Austria, some of the money taken even as the refugees were denied asylum or passage. Your banking system is a clearing house for illegal activities. So again, pardon me for not buying into the holier than though attitude you seem to possess.



Of all the things to worry about... the Wookie has no pants.
User currently offlineLaxintl From United States of America, joined May 2000, 25532 posts, RR: 50
Reply 14, posted (9 years 4 months 1 day ago) and read 5080 times:

Quoting EddieDude (Reply 11):
Which reminds me of Brazil's fingerprinting of U.S. citizens. Is that still happening?

The enforcement of this law conceived by a single Brazilian judge is hit or miss at best. In Sao Paulo there are "Americans" only line to process and finger print passengers however are often not manned especially outside of the morning rush of flights arriving from the United States.

This is law is being challenged in Brazil by both tourism organizations and even the local governments. For instance Rio de Janeiro has seen a drop in the growth in the arrival of American tourist and the dollars they bring the city, and was vehemently is trying to challenge this rule.

Quoting Ikramerica (Reply 13):
make it ridiculously difficult for the US to collect what they are rightfully allowed to charge (like any sovereign nation), the US must make special provisions for how to collect this tax.

Agree, the somewhat unusual avenue to tax earned income of international crews was the direct result of the difficulty the US has had with trying to settle a myriad of tax issues with many Latin American countries.
The IRS has decided to strictly interpret and enforce rules that clearly state that income earned in the United States is subject to US taxation.



From the desert to the sea, to all of Southern California
User currently offlinePPVRA From Brazil, joined Nov 2004, 8964 posts, RR: 39
Reply 15, posted (9 years 4 months 22 hours ago) and read 5043 times:

Wait a second, is this just for airline crews or general business as well?

I can see it for general business, but it it only applies for crews, I don't see the point. Crews on the ground are a liability to airlines and money making for the respective countries they are in, i.e. paying for hotel stays, food, and money spent for personal expenditures by the crews. I mean, aren't they basically tourists for the mean time they are there?

PPVRA



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineLegacy135 From Switzerland, joined May 2005, 1052 posts, RR: 26
Reply 16, posted (9 years 4 months 18 hours ago) and read 5019 times:

Quoting PPVRA (Reply 15):
I mean, aren't they basically tourists for the mean time they are there?

Yes they are and that's why I don't think it fair to do so. If the airline is going to base somebody for a ceratin time there it is another story but this will also be subject of approval and things like taxes and so will come up automatically.

Quoting Ikramerica (Reply 13):
And Legacy135, your anti-Americanism is nauseating. Please study up on Swiss regulations before you condemn the US and try to teach us a lesson. You tax non-nationals at the local rate for all work performed in Switzerland. These taxes are deductible here in the US, so we are not double taxed, and the same holds true in reverse. You tax everyone like that, just as the EU does, just as the US does. I have no idea how you handle flights from countries that aren't party to a treaty (if there are any), but to condemn the US for bothering to enforce a law and a right that every nation has the right to excercise is baseless.

And if you want to talk about profiting unfairly on the backs of others, just look within. Switzerland is not blameless. When I was in Switzerland in 1997 (or was it 98), your country was all abuzz because the US dared demand your neutral nation return the millions upon millions it stole from Jewish refugees escaping Nazi Germany and Austria, some of the money taken even as the refugees were denied asylum or passage. Your banking system is a clearing house for illegal activities. So again, pardon me for not buying into the holier than though attitude you seem to possess.

You are doing a real bad service to your country and millions and millions of US citizens because you still didn't get where those feelings that offend so many Americans in many cases for unjustifed reasons are coming from. If you want to start talking about the story of the so called "Jewish Gold" and similar things, you should inform yourself briefly first, otherwise it will be very obvious that you are just steaming of nationalism and want to smash down any opinion that does not suit 100% your governments opinion.
You are living in a real great country that does have lots to offer, but remember that you are somewhat less then 300 millions and there are a couple of billions more in the world. Cheers!


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 17, posted (9 years 4 months 2 hours ago) and read 4958 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting Laxintl (Reply 14):
The enforcement of this law conceived by a single Brazilian judge is hit or miss at best. In Sao Paulo there are "Americans" only line to process and finger print passengers however are often not manned especially outside of the morning rush of flights arriving from the United States.

This is law is being challenged in Brazil by both tourism organizations and even the local governments. For instance Rio de Janeiro has seen a drop in the growth in the arrival of American tourist and the dollars they bring the city, and was vehemently is trying to challenge this rule.

Laxintl i agree that Brazil and specially my city needs American tourists. But in our laws states a "Reciprocity Policy". Why American and Brazilian pay so much for a single B1/B2 Visa ? Because one of the two countries established the rule and the other do the same instead of discuss the matter. US is the only country where Brazilians are fingerprinted identified. Even in Europe we don't need a visa! Brazil needs Americans, but Brazilians used to be one of the 8 top visitors in the US and nowadays are ranked 11. In the other hand, flights Brazil-Europe are all with very high loads due to the fact that it's easy to get there and France/Spain/Italy shows huge improvements in terms of brazilian tourists.
Brazil Congress will try to pass an act to release US tourists from any kind of tax to get a Visa but i imagine will keep the fingerprint policy only to americans.

Concerning to Tax Airlines, Brazil and US keeps in force an agreement to avoid double taxation. Brazilian corporates can use tax paid in the US as tax credit in Brazil.
I think US is gonna lose because there are around 100 flights per week operated by AA, DL, CO and UA and only 32 from RG/JJ. Brazilian IRS (Receita Federal) will probably do the same and US salaries use to be larger than the paid by Brazilian Companies.
Brazilian Government will probably appreciate such cenario.

Regards,
Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlineKLM685 From Mexico, joined May 2005, 1577 posts, RR: 19
Reply 18, posted (9 years 4 months ago) and read 4936 times:

The tax is supposed only to be to AIRLINE CREWMEMEBERS of flights going to the US. But it is said that this will of course be reflected with what passengers pay because of the amount of money that this tax implicates.

Its only a sad intent of helping the US economy, which will end up with a huge crisis in aviation between the US and Latin American.

It is a must that this picked up countries charge the same tax to US carriers flying to this countries. We can't just stand with our arms crossed.

Quoting Laxintl (Reply 14):
n Sao Paulo there are "Americans" only line to process and finger print passengers however are often not manned especially outside of the morning rush of flights arriving from the United States.

Two days ago I arrived in the morning from MEX and there was this American citizien who just passed normally through immigration.


Alonsou
(muito obrigado)



KLM- The Best Airline in the World!
User currently offlineLaxintl From United States of America, joined May 2000, 25532 posts, RR: 50
Reply 19, posted (9 years 3 months 4 weeks 1 day 20 hours ago) and read 4914 times:

Quoting KLM685 (Reply 18):
But it is said that this will of course be reflected with what passengers pay because of the amount of money that this tax implicates

How are airfares linked to this tax? Its a personal income tax. Not a tax on the airlines themselves. If you as the airline employee earn a portion of your income in the United States and reside in one of the countries that do not have a formal tax treaty with the United States you will be subject to the taxation accordingly.


As stated this issue is part of a much greater tax problem the United States experiences with most of Central and South America. The US government ends up spending hundreds of millions if not billions providing services for citizens of foreign countries without being able to charge back and recoup portions of the cost for these services.

In addition the United States especially since 9/11 feels such tax treaties are part of its overall security policy as they provide means to control and track flows of money by limiting money laundering, narco trafficking and potentially terrorism.

These issues have been on and off issues for much of the last several decades, however grew in stature in the 1990s, and finally came to a head after 9/11.

The selection of airline crew members for the enforcement of this common law is likely as the result of aviation commerce having a prominent place in the national economies of many of the target counties.

If and when the Central American Free Trade Agreement passes, all the member countries will be removed of this enforcement list as they will have complied by entering into a formal tax treaty with the United States, so the overall list of countries will have been reduced greatly.



From the desert to the sea, to all of Southern California
User currently offlineLegacy135 From Switzerland, joined May 2005, 1052 posts, RR: 26
Reply 20, posted (9 years 3 months 4 weeks 1 day 15 hours ago) and read 4902 times:

Quoting Laxintl (Reply 19):
If and when the Central American Free Trade Agreement passes, all the member countries will be removed of this enforcement list as they will have complied by entering into a formal tax treaty with the United States, so the overall list of countries will have been reduced greatly.

I think this is the way to go if there is a real need to tax reciprocally. I can't imagine paying taxes all over the world where I disembark the aircraft. Otherwise if this goes on we will one day be back in a situation like medium age where taxes have been asked at every bridge and for each road to pass or to enter a town.
Making up reciprocal agreements will furthermore probably bring much more money in the end. Remember, if you cash the individual this needs to be administrated and administration is normally somewhat that results expensive. It could easily be that the cost to cash 1 $ is like 2 $ so...

Quoting LipeGIG (Reply 17):
US is the only country where Brazilians are fingerprinted identified.

Swiss people as any other Europeans need to fingerprint as well. We have received now a deadline to introduce biometric datas in the passports, after this deadline everybody not having those datas in the passport needs a visa. As this deadline is rather short and the US government made clear that there is no discussion about a possible extension, EU starts to think loud to apply same laws for US citizens as well within the same period.

Would be real great if there was a common way to treat all those issues and to go for a common way. One thing is for sure: Any costs resulting from all kind off stuff discussed here will always be paid by the customer. It will be added to the airfare, so the real looser is every single one of us, looking for a ticket.


User currently offlineLipeGIG From Brazil, joined May 2005, 11440 posts, RR: 58
Reply 21, posted (9 years 3 months 4 weeks 1 day 3 hours ago) and read 4860 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting Legacy135 (Reply 20):
Would be real great if there was a common way to treat all those issues and to go for a common way. One thing is for sure: Any costs resulting from all kind off stuff discussed here will always be paid by the customer. It will be added to the airfare, so the real looser is every single one of us, looking for a ticket.

That's true. And also in terms of time spend.

Quoting Legacy135 (Reply 20):
Swiss people as any other Europeans need to fingerprint as well. We have received now a deadline to introduce biometric datas in the passports, after this deadline everybody not having those datas in the passport needs a visa. As this deadline is rather short and the US government made clear that there is no discussion about a possible extension, EU starts to think loud to apply same laws for US citizens as well within the same period.

Looks like that EU will use reciprocity too. It is good to see that not only Brazilians claims a better way to be received in other countries. Altought Brazilian Old passport (recently Federal Police presents the new passport with a lot of security items) is easy to be copied we are always welcome at EU, other Latin America Countries and even Canada and Asian nations without any kind of fingerprint identify. It seems that some EU countries are not requested to be identified. It's right ?

Rgds,
Felipe



New York + Rio de Janeiro = One of the best combinations !
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