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Air departure tax risk to highlands and islands

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The Scottish government has asked the UK to amend Scotland’s block grant funding arrangement in connection with the devolution of air passenger duty (APD), to enable Scotland to maintain its highlands and islands exemption under the new air departure tax without suffering a significant drop in revenue.

An exemption from APD for flights from the highlands and islands has been in place since 2001. Transferring the exemption to the new air departure tax requires European Commission approval under EU state aid rules.

Scottish finance secretary, Derek Mackay, said: ‘To match the exemption for all highland and island flights, including connecting flights, would require the Scottish government to forego annual revenues of more than £320m.

‘I have suggested that the UK Government agrees to amend the block grant adjustment to enable the Scottish government to deliver support … in a way that ensures neither the highlands and islands or Scotland’s public finances suffer as a result of this apparent defect in air passenger duty.’


Issue: 1372
Categories: News , Indirect taxes , VAT