The aviation industry is going through one of the most difficult periods in the entire history of Ukraine's independence. The closed sky due to the war unleashed by Russia has halted the domestic civil aviation market; Ukrainian airlines are forced to operate exclusively abroad, and enterprises face financial difficulties, personnel challenges, and the lack of a long-term state development strategy. However, the problem is much deeper than it might seem at first glance. The weakening of civil aviation directly affects the state's defense potential, as military and civil aviation in Ukraine are closely intertwined and effectively function as a single ecosystem. Volodymyr Semenov, Director General of the Aerospace Association of Ukraine, spoke about this in an exclusive comment to UNN.
According to him, civil and military aviation have much more in common than is commonly believed.
"Yes, they are connected, and yes, they are serviced [together]. These are the same people, just with different security clearances,"
According to him, it is a matter of a shared production and personnel base. Engineers, technical specialists, and personnel working with civilian aircraft are often involved in the maintenance of military aviation equipment as well.
The difference, according to Semenov, mainly lies only in specialized equipment and certain systems of military aircraft.
"The machinery is practically the same. The military has additional devices that require more detailed maintenance alongside the military. But overall, it is the same system,"
Moreover, any aircraft can be considered dual-use equipment. That is why civilian and military aircraft usually undergo repairs and maintenance at the same aircraft repair enterprises.
"They are repaired and maintained, in principle, at the same enterprises. And by the same people,"
This interdependence is especially important now, when Ukrainian civil aviation has effectively moved abroad due to the full-scale war. Despite the obvious difficulties, the work of Ukrainian civil airlines in international markets also has an important positive effect on the country's entire aviation industry.
According to Semenov, it is precisely because Ukrainian civil aviation continues to work abroad that it is possible to retain key specialists, their qualifications, and professional competencies. At the same time, specialists who service military aviation in Ukraine can also service civil aviation equipment abroad.
Working in the international market allows Ukrainian aviation specialists not only to earn income but also to work with new types of equipment, undergo additional training, and accumulate competencies that may later be critically important for the Ukrainian military sector as well.
"This is an opportunity to retain people, train people in additional types of equipment, additional types of repair, maintenance, and simply pay salaries,"
A separate factor, according to him, is the level of remuneration. Working abroad allows Ukrainian specialists to stay in the profession and not lose their qualifications in conditions where opportunities for civil aviation within the country are significantly limited. Therefore, today civil aviation performs not only an economic function but also maintains a personnel reserve, technological competencies, and a production base that directly affect defense.
That is why any risks to civil aviation can have long-term consequences for the country's defense capability.
As a reminder
Investigators of the Bureau of Economic Security (BES) have already opened a number of criminal proceedings involving almost all Ukrainian companies that lease aircraft abroad from non-resident companies of Ukraine. Investigators are convinced that airlines should pay royalties in Ukraine—a fee charged for the use of intellectual property. At the same time, the fact that transport is not intellectual property is completely ignored, and Conventions on the avoidance of double taxation are in force between Ukraine and a number of countries. According to these agreements, Ukrainian companies pay taxes in the countries where the lessor companies are residents. At least 5 airlines have already suffered from BES pressure: UIA, "Constanta Airline", "Urga", "H3OPERATIONS", and "Skyline". In addition, court materials indicate similar approaches in other industries: they are trying to impose an additional levy on leased railway transport and even agricultural machinery.
It is important to note that for over 30 years, the legislation regarding the taxation of leasing in Ukraine has not changed, and previously it did not raise questions or remarks from either the tax or law enforcement authorities. Therefore, there are obviously no justified grounds for the BES investigators to change the interpretation of the legislation, and the situation looks exclusively like pressure on business that harms the state.
The situation changed after the State Tax Service of Ukraine published an article on May 24, 2024, with explanations regarding the taxation of leasing operations by airlines. In these "reflections on the topic," tax officials indicate that the leasing of aircraft from non-resident companies must be taxed as royalties. At the same time, the fiscal authorities juggle articles of international conventions on the avoidance of double taxation, claiming that for aircraft rentals, airlines must pay fees as if for the use of intellectual property.
Such an approach is not just an erroneous interpretation of tax law norms, both Ukrainian and international, but a "tax on the Ukrainian flag," which makes Ukrainian air carriers uncompetitive in the global market and threatens the destruction of the entire civil aviation industry.