US confirms China has ended tax breaks for domestic airplanes

The Obama administration said Tuesday that China has ended tax breaks benefitting its domestically produced aircraft over those of U.S. manufacturers. 

U.S. Trade Representative Michael Froman said Beijing has rescinded a policy that exempted certain types of its own aircraft, generally those under 25 metric tons by weight, including business jets, from a 17 percent value-added tax while imposing the tax on imported aircraft.

{mosads}“While we are happy to announce this discrimination has ended, we remain deeply concerned about China’s lack of transparency on taxes affecting American products,” Froman said.

“Our proactive efforts in this case put a spotlight on this problem and prompted China to remove the secrecy that obscured this policy,” he said.

The United States challenged the tax exemptions at the World Trade Organization (WTO).

Froman said that China did not publish the tax exemptions or the official documents that ended them at the time, as required by its WTO commitments.

“As this case highlights, not only has China continued to maintain illegal market distorting policies since it joined the WTO, its policies are too often hidden behind a wall of secrecy,” said Sen. Ron Wyden (D-Ore.).  

“That must stop,” Wyden said.

Congressional lawmakers hailed the news as a win for the U.S. aviation industry.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) called the announcement “a huge victory for American aerospace workers and another example of how our nation wins when we rigorously enforce our trade agreements.”

Since 2009, the Obama administration has brought 23 enforcement actions at the WTO, including 14 challenges against China. The United States has won every single one of those complaints that has been decided so far.