Cathay Pacific and many of its overseas-based pilots are facing a financial hit after a perfectly legal 'taxsaving'' scheme set up in the early 1990s backfired.
One well-informed source said the problem may have already cost Hong Kong's flagship airline a substantial amount.
The revelation comes just days after Cathay reported a HK$935 million first half loss, compared with a HK$2.8 billion profit a year earlier.
In 1992, Cathay employed all its pilots overseas through a specially set-up shell company called Veta Limited.
The move was taken to save on foreign tax and social benefit contributions. But an aviation insider told the Sunday Morning Post that governments in several countries where Cathay has bases are seeking payment of outstanding contributions stretching back more than 20 years.
The Hong Kong Inland Revenue Department is also understood to be looking at possible outstanding payments linked to Cathay and many overseas-based pilots.
