Aviation operators seek tax waivers on jet fuel

 
The Aviation Operators Association of Bangladesh (AOAB) has proposed a package of tax exemptions, including the withdrawal of customs duties and value added Tax (VAT) on jet fuel.

During a pre-budget meeting with the National Board of Revenue (NBR) on Tuesday, AOAB Secretary General Mofizur Rahman presented the proposals for the 2026-27 fiscal year, according to bdnews24.com. 

The association specifically urged the government to adjust tax rates during global crises, such as wars, to prevent "abnormal" spikes in fuel costs from crippling local carriers.

The AOAB proposed slashing the VAT on jet fuel to 5 percent and completely withdrawing the current 6 percent import duty and 2 percent advance tax.
Currently, jet fuel is subject to a 15 percent VAT alongside these duties.

The association recommended the full withdrawal of import taxes and the 7.5 percent advance income tax on aircraft and helicopter spare parts and engines.

It also called for facilitating bonded warehouse licences for the import of spare parts used in passenger aircraft and helicopter maintenance.

The association urged the exemption of VAT and income tax on professional training for aviation staff, noting that under the 2023 Income Tax Act, local training is taxed at 10 percent, while foreign training faces a 20 percent tax along with an additional 15 percent VAT.

The AOAB proposed reducing the total miscellaneous taxes per domestic passenger from Tk 1,125 to Tk 725.

The organisation called for an amendment or repeal of Section 163 of the Income Tax Act 2023 to ensure that any excess tax paid at source is refundable to the companies.

The association highlighted that the total tax incidence on helicopter imports rose to 37.25 percent in the 2025-26 fiscal year. They have urged the NBR to restore the previous 10 percent rate.

The AOAB also sought exemptions on the 15 percent VAT and 30 percent supplementary duty currently imposed on chartered aircraft and helicopter services, as well as a waiver of the 5 percent source tax on their service bills.

The proposals come at a time when the aviation sector is grappling with frequent fuel price hikes and increased operational costs due to regional geopolitical instability.