Lufthansa Technik Philippines May Cease Operations Due To Tax Reform
Lufthansa Technik Philippines May Cease Operations Due To Tax Reform
Lufthansa Technik Philippines, the country’s largest aircraft maintenance, repair and overhaul (MRO) service provider are at risk of closing its operations if the government passes the proposed Corporate Income Tax Incentives Reform Act (Citra) bill in its current form.
The company has invested $270 million in infrastructure and personnel training in Philippines since 2000 and currently employs 3,000 workers. Furthermore, Lufthansa has announced plans to invest $40 million to expand its operations in the country, which would generate 300 jobs in the workforce. However, with the added custom duty and value-added tax (VAT) on imported spare parts, the company fears of struggling with unbearably high costs, hampering its future plans.
“In its current form, the MRO industry is not properly represented in the bill. The new Citira has no representation for MRO companies, so we consider that as a technicality; [and] if you don’t solve that, then we cannot survive,” said Elmar Lutter, Lufthansa Technik Philippines President and Chief Executive Officer.
The company might have to close all four facilities in Philippines and look for an alternative location for its Asia hub such as Vietnam.
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