| BRASILIA, Sept 19
BRASILIA, Sept 19 Brazilian airlines are up in
arms over a decision by Brazil's tax authority to list Ireland
as a tax haven, which means about 1 billion reais ($306 million)
in new taxes on aircraft leases for carriers struggling to
"The impact is brutal," said Eduardo Sanovicz, head of
Brazilian airline association ABEAR, who will meet on Tuesday
with tax authorities in Brasilia to try to reverse the surprise
tax decision taken without consulting the airline industry.
Sanovicz said 60 percent of the 520 aircraft flying
commercially in Brazil are leased from companies registered in
Ireland, where they enjoy favorable tax rules.
Brazil's tax authority announced on Thursday it was adding
Ireland, Austria, Curaçao and Saint Martin to its list of
countries denominated as tax havens.
Companies based there will have to start paying a 25 percent
tax rate on transactions with Brazilian companies, costing
airlines about 1 billion reais ($306 million) on leasing
contracts that are signed for up to 10 years, Sanovicz said by
Shares of carrier Gol Linhas Aereas SA fell 12
percent last week on the decision.
Brazilian airlines are reeling from high jet fuel costs and
the drop in demand for air travel due to Brazil's two-year
recession, and say they have no room to pass additional taxes
along to ticket prices.
The companies complain jet fuel accounts for 37 percent of
airfares compared to an average 27 percent worldwide, mainly due
to the ICMS sales tax collected by Brazilian states.
The world's second largest mining company, Brazilian iron
ore giant Vale SA, will also be affected by Brazil's
listing of Austria as a tax haven, adding to its woes resulting
from low iron prices that are down 50 percent since 2014.
Vale owns Salzburg, Austria-based subsidiary Vale
International Holdings GMBH, which is used as a holding company
for various international assets.
Vale and other Brazilian companies have used holding
companies in countries such as Austria with low corporate taxes
to reduce their tax burden on overseas assets and subsidiaries.
Brazil's JBS SA, the world's largest meatpacker,
is also considering a planned global reorganization, basing the
headquarters of a new company in Ireland and listing its shares
in New York.
($1 = 3.27 Brazilian reais)
(Additional reporting by Jeb Blount in Rio de Janeiro; Editing
by Paul Simao)