Airlines from both sides of the strait can enjoy mutual tax preferential treatments. China has given Taiwan airlines tax preferential treatment, under which a 3% business tax and a 1.25% income tax is waived, as of December 2008.
However, Taiwan hasn’t been able to reciprocate China’s gesture, as a draft amendment to the Cross-Strait Relations Act, which gives legal ground to the preferential treatment, has not passed the Legislative Yuan. As such, Chinese air and sea operators are subject to a tax for earnings they make in Taiwan.
Dissatisfied, China has asked Taiwanese airlines, including China Airlines and EVA Air, to pay back taxes that accumulated starting in December 2008.
China Post reports that EVA Air, meanwhile, said it has not been asked to pay taxes to China. However, the airline said it has not received official documents on a waiving of the tax. Without those documents, EVA Air cannot wire earnings it has made in China back to Taiwan, it said, adding this will create inconveniences for its China operations.