Two Americas, two tax philosophies

opinion

by Fayaz Hussain

12 October 2026

Same aircraft. Same engines. But opposite mood music. Canada and Brazil are two of the world’s biggest business aviation markets where turboprops make up the backbone of operations. Toronto is handing aircraft owners gift vouchers. São Paulo, on the other hand, is introducing new taxes.

But Brazil’s new costs to aircraft ownership are still unclear. Nicole Cunha, an aviation finance lawyer at Kincaid Law Firm, tells us that the “Selective Tax [Seletivo Imposito], should start next year, in 2027, but it still depends on an Ordinary Law to regulate its implementation, and that law hasn’t been published yet”.

It would apply on the sale or import of an aircraft, not annually. Imported purchases pay in full upfront, while leased aircraft under temporary admission regime for commercial use pay “proportionally to the period the aircraft stays in the country”. “We do expect costs to increase, because these are new taxes that didn’t apply before,” she says.

Almost everything else is open to interpretation. The Ministry of Ports and Airports in Brazil recently submitted a proposal to the Ministry of Finance recommending a 3.5% tax rate for air taxi companies, while other private aviation operations and operators would be subject to a 6.5% tax rate. Cunha adds: “But it’s not a fixed rate”, because federal law allows step up in rates based on environmental sustainability criteria to be defined in the ordinary law. A zero rate may be available for aircraft with “high energy-environmental efficiency”, a term the law has yet to define.

A separate property tax, IPVA, adds further costs to owning a business aircraft. IPVA (Imposto sobre a Propriedade de Veículos Automotores) is Brazil’s annual state-level tax on owning motor vehicles, which Brazil is now expected to extend to aircraft and boats, pending regulation and a court challenge.

“Even for IPVA we don’t have a start date,” says Cunha. A draft bill mentions 3.5% rate, “but I can’t confirm that”, she adds. Politics is compounding the situation further. With the presidential election still ongoing and the main candidates “very close in the polls”, Cunha says, “we don’t know where things are going”. Brazil is holding presidential elections this month, with new administration expected to take office on January 6th, five days after the Selective Tax comes into force.

Meanwhile, in North America, Canada is going the other way. The new rules treat aircraft as productive capital contrary to their approach in the past. “Four years ago, our government brought in a luxury tax on aircraft,” Stan Kuliavas, vice president of sales and business aviation at Levaero, tells us. “This month [September] they put aircraft on a list of productivity assets, next to fibre and pipelines and rail. That’s quite a turnaround.”

The change means immediate expensing of deprecation. Ehsan Monfared, managing partner at law firm YYZ Law, says buyers can now expense the cost “in the same taxation year in which they acquire it”, for aircraft bought on or after September 15th, 2026. Previously, Kuliavas notes, aircraft were written down at 25% a year, leaving “about a third of an airplane” undeducted after four years.

Both Monfared and Kuliavas say there are limits to this change. “It doesn’t make your aircraft any cheaper,” Kuliavas explains. “It just changes when you get your money back”. Monfared estimates savings to the tune of 2-3%, adding that recapture applies on sale.

Both markets are pushing buyers to act early. In Brazil, “people are afraid”, Cunha says, and traders are telling clients: “I have an aircraft here with all taxes paid under the current reduced benefits. I suggest you buy now.” In Canada, the change comes at a time when the country is in the middle of “one of the tightest aircraft markets that we’ve had in years”, Kuliavas says.

Canada’s benefit is modest in dollars but large in message and buyers must plan around recapture. Brazil’s cost is undefined, and buyers must wait for elections.