Launching Taxes For Space Tourism
By Rene A. Martin
Billionaires like Richard Branson, Jeff Bezos, and Elon Musk have shown everyone that space travel can be safe and commercially possible. Given its fiscal potential, it is a fact that there’s money and business in space tourism– and when there’s profit, taxes will necessarily come into play.
Starting from US$250,000, people may soon go to suborbital space aboard one of Virgin Galactic’s spacecrafts. For five to seven minutes, travelers can finally experience the enigmatic phenomenon which the astronauts call the “Overview Effect”. Such a rare offer makes it feasible how the space tourism market is currently projected at $2.58 billion by 2030 with a compound annual growth rate (CAGR) of 17.15% during a nine-year forecast period.
Then there’s also the proposed Securing Protections Against Carbon Emissions (S.P.A.C.E.) Tax Act by Oregon Representative Earl Blumenauer which intends to impose excise taxes on space tourism travel. Blumenauer reiterated that space travel should be treated as any other form of air travel made out of leisure and entertainment, with the imposition of corresponding excise tax rates. The proposed Act shall be on a per passenger basis and two-tiered for suborbital and orbital travels. Blumenauer further clarified that exemptions will be made for official NASA space flights which are to be paid from excise taxes of commercial travelers.
For space tourism passengers, it’s somewhat a bitter pill to swallow how they will eventually be subjected to tax considering that billionaire space cowboys like Branson, Bezos, and Musk can circumvent federal income tax payments through legal means. As many now know, Bezos did not pay taxes from 2006 to 2018, while Musk skipped it in 2018. The same goes for Branson who paid zero pounds for his income and capital gain while serving as founder of the Virgin Group.
As Musk’s SpaceX continues to work with NASA for the upcoming Artemis missions to the moon, Musk and his investors are currently enjoying government incentives that include grants, tax breaks, discounted loans, and environmental credits among others, which sums up to a whopping $4.9 billion.
Meanwhile,Bezos’s Blue Origin has already started its commercial operations and will soon be followed by Virgin Galactic early next year. In the accounting world, that means pressure for the International Accounting Standards Board to come up with the corresponding accounting rules and standards on space tourism.
Aside from the absence of standardized rules on excise tax, cryptocurrency payments should be another hot topic lawmakers should include in their talks as it is highly plausible to make payments for suborbital travel via such intangible assets. This, considering how Musk recently expressed his support for Bitcoin, Ether, and Dogecoin even after backtracking from accepting Bitcoin payments for Tesla units earlier in May.
To date, cryptocurrencies are still considered as cash equivalents in the form of digital money. This doesn’t exactly coincide with the International Accounting Standards (AIS) 7 definition of the term ‘cash’ for what they truly are– highly liquid investments that can be converted to amounts of cash and have low-risk of changes in value. For accountants everywhere, bracing for space tourism entails new rules, plus unique and adjusted accounting treatments to balance their clients’ books. In the meantime, while there are still no clear standards for taxes and cryptocurrencies for out-of-this-world travels, we can only hope that larger strides from concerned agencies can be taken to make this innovative giant leap in tourism a reality.
The writer’s views and opinions are his own and do not constitute financial advice nor represent the views and opinions of BABYLON 2K (B2K), the UHY PH Academy (Blog), and its affiliates.
Nothing published within the blog constitutes for investment, accounting, tax related recommendations, nor should any data or content published on the blog be relied upon for any of the aforesaid activities.
B2K, the UHY PH Academy (Blog), and its affiliated Firms encourage everyone to perform essential independent research and consultation from qualified investment professionals prior to making financial decisions.
- Application for SEC’s Grant of Amnesty on or before April 30, 2023
- Risks of Penalty for not Disclosing the Company’s Beneficial Ownership under the SEC MC No. 15, Series of 2019
- Lazada Riders as Employees Under the Four-Fold Test
- New and Revised PFRSs for Annual Periods beginning on or after January 01,2023
- Further clarification of issues raised in transitory provisions for the VAT Zero-rate Incentives