Internal Revenue Bulletin:  2009-42 

October 19, 2009 

Rev. Rul. 2009-34


Section 4221(e) reciprocal privileges. The list of countries that allow reciprocal privileges for purposes of the exemption for supplies for civil aircraft of foreign registry is updated and restated. Rev. Ruls. 74-346, 75-190, 75-398, and 75-526 superseded.

PURPOSE

This revenue ruling updates the list of countries that allow substantially reciprocal privileges for purposes of section 4221(e)(1) of the Internal Revenue Code (Code).

LAW

Section 4081 imposes a tax on certain removals, entries, and sales of taxable fuel, including kerosene. Section 4082(e) generally exempts from the § 4081 tax kerosene that is removed from any refinery or terminal directly into the fuel tank of an aircraft if such aircraft is employed in foreign trade or trade between the United States and any of its possessions. A similar exemption from the tax imposed by § 4041(c) on other liquids used in aviation is allowed by §§ 4041(d)(5) and (g)(1). The exemptions described above are derived from § 4221(d)(3).

Section 6427(l) sets forth the payment provisions that apply if previously taxed kerosene is used in an aircraft engaged in foreign trade or trade between the United States and any of its possessions.

Section 4221(d)(3) of the Code provides that the term “supplies for vessels or aircraft” means fuel supplies, ships’ stores, sea stores, or legitimate equipment on vessels actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States or between the United States and any of its possessions. For purposes of the preceding sentence, the term “vessels” includes civil aircraft employed in foreign trade or trade between the United States and any of its possessions.

Section 4221(e)(1) of the Code provides that, in the case of articles sold for use as supplies for aircraft, the privileges granted under § 4221(a)(3) in respect of civil aircraft employed in foreign trade or trade between the United States and any of its possessions, in respect of aircraft registered in a foreign country, shall be allowed only if the Secretary of the Treasury has been advised by the Secretary of Commerce that he has found that such foreign country allows, or will allow, substantially reciprocal privileges in respect of aircraft registered in the United States. If the Secretary of the Treasury is advised by the Secretary of Commerce that he has found that a foreign country has discontinued or will discontinue the allowance of such privileges, the privileges granted under § 4221(a)(3) shall not apply thereafter in respect of civil aircraft registered in that foreign country and employed in foreign trade or trade between the United States and any of its possessions.

NOTIFICATION

The Secretary of Commerce has advised the Secretary of Treasury that the current list of foreign countries that allow substantially reciprocal privileges in respect of aircraft registered in the United States is as follows:

Afghanistan Lebanon
Albania Liberia
Antigua and Barbuda Luxembourg
Argentina Macau
Aruba Madagascar
Australia Malaysia
Austria Maldives
The Bahamas Mali
Bahrain Malta
Barbados Marshall Islands
Belarus Mexico
Belgium Federated States of Micronesia
Belize Moldova
Benin Montenegro
Bermuda Morocco
Bosnia and Herzegovina Namibia
Brazil Netherlands
Brunei Darussalam Netherlands Antilles
Burkina Faso New Zealand
Burma Nicaragua
Cameroon Nigeria
Canada Norway
Cape Verde Oman
Chad Pakistan
Chile Palau
People’s Republic of China Panama
Colombia Paraguay
Democratic Republic of the Congo (only aircraft fuel and lubricants) Peru
Cook Islands Republic of the Philippines
Costa Rica Poland
Cote d’Ivoire Portugal
Cuba Qatar
Czech Republic Romania
Denmark Russia
Dominica Rwanda
Ecuador St. Kitts and Nevis
Egypt (only aircraft fuel and lubricants) St. Lucia
El Salvador St. Vincent and the Grenadines
Ethiopia Samoa
Fiji Saudi Arabia
Finland Serbia
France Singapore
Gabon Slovak Republic
The Gambia South Africa
Federal Republic of Germany Spain
Ghana Sri Lanka
Greece Suriname
Grenada Sweden
Guatemala Switzerland
Guyana Taiwan
Haiti Tajikistan
Honduras Tanzania
Hong Kong Thailand
Hungary Tonga
Iceland Trinidad and Tobago
India Tunisia
Indonesia Turkey
Iran Turkmenistan
Ireland Tuvalu
Israel Uganda
Italy Ukraine
Jamaica United Arab Emirates
Japan United Kingdom
Jordan Uruguay
Kazakhstan Uzbekistan
Kenya (only aircraft fuel and lubricants) Venezuela
Kiribati Vietnam
Republic of Korea Zambia
Kuwait Zimbabwe
Kyrgyzstan  

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 74-346, 1974-2 C.B. 361, Rev. Rul. 75-190, 1975-1 C.B. 348, Rev. Rul. 75-398, 1975-2 C.B. 434, and Rev. Rul. 75-526, 1975-2 C.B. 435, are superseded.

DRAFTING INFORMATION

The principal author of this revenue ruling is Celia Gabrysh of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this revenue ruling, contact Celia Gabrysh at (202) 622-3130 (not a toll-free call).


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