New | Exclusive: Comac denies tax break allegations as US brings WTO case on Chinese aircraft imports
China’s aircraft maker Comac has denied it was given tax breaks by the government in breach of World Trade Organisation rules after the United States initiated a WTO case against China’s aircraft import tax.
Washington’s Trade Representative on Tuesday accused Beijing of discriminating against foreign aircraft makers by charging a 17 per cent value-added tax on imported airplanes lighter than 25 tonnes but not applying the same VAT to domestic aircraft. The US requested consultations with China on the issue, the first step of a process that could lead to trade sanctions.
The allegations come after China last month made its most substantial progress in aircraft manufacturing when its first self-developed Comac C919 narrowbody jet completed its assembly phase and the smaller ARJ21 regional jet, a sub 25-tonne product, entered service.
“China’s discriminatory, unfair tax policy is harmful to American workers and American businesses of all sizes in the critical aviation industry, from parts suppliers to manufacturers of small and medium-sized aircraft,” said a statement from the US Trade Representative.
READ MORE: After 13 years, China’s home-grown Comac ARJ21 passenger jet enters commercial service
China’s Ministry of Commerce did not respond to a faxed request for comment on the US statement.
Jeff Cheng, a Comac spokesman, told the South China Morning Post: “We do not have any comments on the statement, but all of Comac’s market transactions, including our sales of planes and our import of parts and components from our overseas suppliers are subject to strict regulation and relevant taxes.”