I-T dept denies tax benefits to Irish aircraft leasing firms, may impact deals: Report

The tax department’s calculations are under review both the countries are signatories to BEPS Multilateral Instrument, which is an internationally-managed mechanism to check tax loopholes

The Income Tax Department has denied tax benefits to at least three Irish firms leasing out aircraft to Indian airlines, The Economic Times reported on October 29.

The benefits are part of a tax-friendly treaty between India and Ireland, the report said. However, the tax officials have concluded that these offshore aircraft leasing firms are avoiding tax by operating from Ireland, the paper said.

The tax department’s calculations are under review as both the countries are signatories to the BEPS Multilateral Instrument, which is an internationally managed mechanism to check tax loopholes, ET said.

According to the report, the European nation has been a hub of companies leasing out aircraft to airlines in India, and any negative tax implications could have an impact on that.

Moneycontrol could not independently verify the report.

Moneycontrol had reported in September that India’s aviation regulator DGCA has tightened the oversight on short-term aircraft 'wet leases' or plane rentals that include crew and maintenance, potentially hobbling operations of financially weak airlines as they struggle to expand fleets amid soaring travel demand, industry experts said.