The State Tax Service (STS) has identified only one case of violation in the taxation of aircraft leasing, while the Bureau of Economic Security (BES) is investigating cases against 5 airlines
Kyiv • UNN
Deputy Director of the STS Department Victoria Kasyan reported that only one audit of airlines revealed a reclassification of lease payments into royalties. The BES is investigating criminal cases against five air carriers for non-payment of 15% royalties.
Tax audits have identified only one case of violation in the payment of taxes by an airline for aircraft leasing – the carrier was required to pay royalties. This was reported during a roundtable by Victoria Kasian, Deputy Director of the Transfer Pricing Department of the State Tax Service of Ukraine, writes UNN.
The Bureau of Economic Security is investigating a number of criminal proceedings against at least five Ukrainian airlines. Investigators believe that carriers should pay an additional 15% royalty (tax on the use of intellectual property) for leasing aircraft from non-residents of Ukraine.
Criminal cases were opened after the State Tax Service, despite no changes to tax legislation, published an article in 2024 proposing to tax leasing operations of air and rail transport from non-residents of Ukraine as royalties. Tax officials believe that carriers leasing airplanes, helicopters, or railway cars are actually using equipment leasing, not transport leasing.
In this publication, the STS notes that from 2017 to 2023, companies paid UAH 13.1 million in income to non-residents in the form of leasing and did not pay the 15% royalty in Ukraine.
Based on this position, the Bureau of Economic Security is investigating criminal cases against the airlines MAU, "Avia Company Constanta", "Urga", N3Operations, and "Skyline".
According to the STS representative, during tax audits various questions may arise regarding the application of international conventions on the avoidance of double taxation, when the taxpayer and the tax authority determine differently which article of the international agreement should apply to a specific transaction. At the same time, she emphasized that the issue of reclassifying leasing payments as royalties currently concerns only one established case.
"Based on the results of one audit of companies in the aviation industry, leasing payments were reclassified as royalties. Only one audit," noted Victoria Kasian.
She also reported that the tax service keeps statistics on leasing payments made by Ukrainian airlines to non-residents, but could not name the volume of such transactions or the number of jurisdictions where the expanded definition of "royalty" applies.
Victoria Kasian also confirmed that if violations were not recorded during a tax audit, they are considered unestablished.
"If the audit report does not record a violation, it means no violations on these issues have been established," she said.
At the same time, Ruslan Melnychenko, head of the Legal Committee of the Aerospace Association of Ukraine, noted that all airlines that contacted the association reported that they had previously undergone various types of tax audits – desk, field, and comprehensive. According to him, none of these audits contained claims regarding non-payment of tax on non-resident income or repatriation tax.
The lawyer also drew attention to the fact that airlines are now being retroactively charged an additional 15% royalty for leasing – for the last 7 years.
"If we collect these taxes for the last seven years, the companies will definitely all go bankrupt," stated the representative of the Aerospace Association.
Representatives of the aviation industry emphasize that they are ready to continue paying all taxes in Ukraine as defined by law. However, they demand a unified and clear approach from the state to the taxation of leasing operations in accordance with the Tax Code of Ukraine and international law norms.