The income tax liability of offline airline carriers

• Main Author: dela Cruz, Ma. Francesca Olalia
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Aircraft carriers—Taxation—Law and legislation—Philippines; Aircraft carriers—Taxation—Philippines; Tax Law
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6894
• Institution: De La Salle University

Day by day, states are becoming more and more interdependent. Technology has created a forum where both developed and developing countries may converge. On the one hand, a united business world has emerged. On the other hand, the commingling of business activities has fostered issues in national law. The most prevalent issue among nations is taxation law. Since tax is the lifeblood of a civilized society, tax law continuously evolves to adjust with the changes in the activities and needs of the world. This thesis deals with one of the many activities, which manifest the direct relation between the interdependence of activities among States and questions on taxation law. Offline carriers are carriers with no flight operations to and from the Philippines. Nevertheless, passage documents of their offline flights are sold by General Sales Agents in the Philippines. Currently, the Court of Tax Appeals ruled that offline carriers are subject to the regular corporate tax of 35% on net taxable income. The thesis addresses the issue of whether or not offline carriers are subject to income tax. Due to the interdependence, this paper will tackle both the Tax Code and Bilateral Tax Treaty and its implications on offline carriers. In order to settle the controversy, the thesis will employ legal research, expert opinion, financial statements and the Porter’s Value Chain. The study provides that offline airline carriers are not threats to online carriers. More importantly, the application of the ruling of the Court of Tax Appeals shall result to zero taxable base. Hence, the result of this thesis departs from the ruling of the Court of Tax Appeals. It is thus suggested that offline airline carriers should not be subject to income tax.