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The Scottish government has been looking into changing the much-disputed Air Passenger Duty (APD) to a devolved Air Departure Tax (ADT), but the process has been stalled pending EU approval.
According to a statement released by finance secretary Derek Mackay, transferring the current Highlands and Islands exemption from APD to the proposed ADT requires the government to notify and seek approval from the European Commission under State Aid rules.
Mackay issued an alternative proposal to the UK government that would provide a similar benefit to flights to and from the region, including connecting flights.
Mackay said: “We have set out a clear aim to reduce the burden of air passenger taxation by 50 per cent and to abolish the tax altogether when resources permit. That commitment will both help to boost international connectivity and generate sustainable growth – priorities that are even more pressing as a result of the EU referendum.
“To match the exemption for all Highland and Island flights including connecting flights would require the Scottish government to forego annual revenues of more than £320 million.
“I cannot see ADT put into operation with this significant uncertainty hanging over the Highlands and Islands.”
Mackay is urging the UK government to take action to ensure “there is no detriment” to the Scottish government as a result of the costs required to enable the tax to be transferred.