The World Trade Organisation's (WTO) dispute settlement panel last week approved $4 billion worth of European Union sanctions against the USA over a 30-year loophole permitting tax-free foreign trade operations by US companies. The EU says it will refrain from imposing the sanctions until the end of this year to give the US government a final chance to change its tax laws. A WTO arbitration panel last year estimated that US companies had saved $4 billion by not paying taxes on overseas earnings, and last week's announcement authorises the EU to raise tariffs on US imports to compensate. Aerospace products are thought to have been excluded from the sanctions under a "gentlemen's agreement", but aviation companies, chiefly Boeing, are among the main beneficiaries of the tax loophole and stand to lose hundreds of millions of dollars if it is closed.
Source: Flight International
