The Russian government’s legislative commission has proposed setting a zero percent value-added tax (VAT) for aircraft registered in Russia to boost civil aviation development.

The government, which published the tax code amendments June 10, also plans to set a zero percent VAT on aircraft engines and spare parts for aircraft registered in Russia. If approved, it will be sent to parliament.

Currently, most Western-built aircraft operating in Russia are registered in Bermuda or Ireland, per Russia-signed agreements transferring airworthiness responsibilities. The agreements are based on Article 83 of the ICAO Chicago Convention.

The foreign registration is a leasing company condition because Russian rules for continued airworthiness are different from European and US rules, which significantly influence negative aircraft residual value.

Over the last several years, authorities have been trying to persuade carriers to choose the Russian registry for Western-built aircraft.

In 2015, it was decided to transfer certification powers from Moscow-based Interstate Aviation Committee (IAC) to other authorities. The Aviation Register of the Russian Federation was established in 2016; it is subordinated to Federal Air Transport Agency, Rosaviatsia.

Polina Montag-Girmes