The Ukrainian Air Transport Association appealed to the Verkhovna Rada Committee on Transport and Infrastructure, as well as to the Public Council under the Ministry of Finance, calling for a unified approach to the application of tax legislation in the area of aviation leasing. Mykola Shcherbyna, executive director of the Public Union "Ukrainian Air Transport Association," said this in an exclusive comment to UNN.
According to him, today, amid the closure of the airspace, the industry primarily needs a state policy aimed at preserving the competence, personnel, and financial capacity to carry out economic activities in the field of air transportation. Instead, differing interpretations of the same provisions have already led to additional tax assessments, the initiation of criminal proceedings, and increased administrative pressure on Ukrainian air carriers, threatening to halt the operations of some carriers.
"Following the roundtable, the Ukrainian Air Transport Association appealed to the relevant parliamentary committee and the Public Council under the Ministry of Finance. We expect that a unified approach to the taxation of aircraft leasing transactions will be developed precisely on the platform of the Ministry of Finance, one that will comply with Ukraine's tax legislation and international conventions on the avoidance of double taxation," Shcherbyna said.
He hopes that, following this, the proposals developed will be considered by a joint working group involving representatives of the government, the relevant parliamentary committee, the State Tax Service, the State Aviation Service, law enforcement agencies, and the aviation community.
"We hope that the result of this work will be a unified legal approach that will prevent pressure on the aviation business through arbitrary interpretation of tax legislation and international conventions. Tax disputes must be resolved exclusively through legal, administrative, and judicial procedures, rather than by criminalizing issues concerning the interpretation of legislation," the UATA executive director emphasized.
It will be recalled
Representatives of Ukraine's aviation industry stated that civil aviation had come under threat of destruction due to the actions of state regulatory authorities. According to them, the new interpretation of the taxation of aircraft leasing transactions with nonresidents of Ukraine as royalties, criminal proceedings, and attempts to impose additional taxes for a seven-year period could ultimately finish off companies that survived the closure of the airspace and relocation abroad due to the full-scale war.
In particular, the Economic Security Bureau is investigating criminal proceedings against at least five airlines, including UIA, Constanta Airline, Urga, Н3Operations, and Skyline, over the alleged failure to pay an additional 15% tax on nonresident income to the Ukrainian budget under aircraft and helicopter leasing agreements. ESB investigators equate leasing payments with royalties and treat aircraft not as means of transport but as "equipment."
The ESB received analytical findings after, in 2024, the previous State Tax Service team published an article proposing that leasing transactions involving transport from nonresidents of Ukraine be taxed as royalties. The documents formed the basis for criminal cases against air carriers.
However, according to lawyers interviewed by UNN, during the investigation, investigators ignore the existing international conventions on the avoidance of double taxation. Agreements with foreign states ratified by the Verkhovna Rada take precedence over national legislation and determine in which state and at what rate the relevant income of a nonresident may be taxed. Therefore, the automatic additional assessment of 15% in Ukraine without taking into account the provisions of a specific convention is at the very least disputable, experts emphasize.
It is worth noting that Ukrainian tax legislation regarding the taxation of leasing has not changed for decades. Moreover, according to the State Tax Service, the airlines underwent tax audits, and only one of them identified violations in the taxation of leasing. The remaining tax audits did not reveal any such violations.
"As a result of one audit of companies in the aviation sector, leasing payments were reclassified as royalties. Just one audit," said Viktoriia Kasian, Deputy Director of the Transfer Pricing Department of the State Tax Service of Ukraine.
However, the absence of violations did not prevent the Economic Security Bureau from opening criminal proceedings against the airlines, believing that they had failed to pay the 15% royalty tax over the past seven years. At the same time, the list of airlines against which law enforcement authorities have claims over leasing may expand at any moment, since approximately 40 air carriers use leases. Thus, the entire civil aviation sector could come under threat.