Abolition of PRC import VAT on leased aircraft
27 July 2018
China has abolished import value-added tax ("VAT") on aircraft "imports by way of leasing" with effect from 1 June 2018. This is a positive development for aviation lessors and financiers entering transactions with operators which involve a lease of the subject aircraft into the PRC as the costs for the lessee have been reduced. For existing leases where the aircraft were delivered prior to 1 June, there is a possibility that import VAT instalments going forward may no longer be payable, but this remains to be clarified.