Philippine Airlines Says $7 Million Tax Bill Ignored Treaty

The IRS is billing Philippine Airlines Inc. $7 million in taxes in violation of the Philippines’ tax treaty with the US.

The airline petitioned the US Tax Court Sept. 10 to dispute IRS decisions that increases its tax liability by about $4.8 million for 2019 and $2.3 million for 2020. According to a notice filed with the petition, the IRS denied the company a tax exemption specifically allowed in the tax treaty between the two countries. Under the IRS’s interpretation, the airline’s US transportation revenues—$322.3 million in 2019 and $151.8 million in 2020—were subject to a 1.5% tax rate.

The ...