Written in conjunction with TMF Group
Indonesia is the fourth most populous country, following only China, India and the United States. It consists of over 17,000 islands that provide a total land mass of 1.9 million square kilometers. The combination of a growing economy, a large population and the need for air travel both within the country and internationally makes Indonesia a booming aircraft market.
Over the past few years, Indonesian airlines have placed orders for modern aircrafts, including Garuda’s purchase of six CRJ1000 NextGen aircraft from Bombardier, with an option to buy 12 more. In June 2015, Garuda committed $20 Billion to acquire 60 planes from Boeing and an additional 30 planes from Airbus, according to The Jakarta Post. Lion Air Indonesia also recently committed $24 billion to Airbus for 234 additional aircraft.
Leasing Arrangements through France
Not all aircraft are purchased outright. Many airlines turn to experienced aircraft leasing firms to simplify the acquisition, taxation and transfer pricing process. A typical transaction might include entities in France, Ireland and Indonesia all working together to ensure compliance and the most advantageous handling of each transaction.
Often times the actual buyer and owner of the plane is an Irish business entity, which then leases to a business entity in Indonesia through France. Setting up the lease in France provides specific tax, accounting and regulatory relief which can be beneficial to all parties.
Doing business in France often means dealing with bureaucracy. For example, the opening of bank accounts can become a time-consuming task due to compliance requirements. Other considerations include tax compliance, reporting, domicile certification, accounting, and corporate secretarial services to the leaser companies. Working with a reputable service provider can help smooth the deal process, and can even continue to provide assistance once the French company is operational and the aircraft is leased on to the Indonesian counterpart.
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