Key Takeaways
- FBR has exempted Rs. 4.29 billion in penalties for PIA.
- Exemption covers default surcharges and advance income tax liabilities.
- Waiver granted to aid successful completion of PIACL’s divestment process.
The Federal Board of Revenue (FBR) has issued a significant relief to Pakistan International Airlines Corporation Limited (PIACL), waiving Rs. 4.29 billion in default surcharges and penalties related to the airline's current income tax liabilities. This decision comes after Lt Gen (retd) Anwar Ali Hyder was appointed as the first PIACL Chairman, following the transfer of management control to the Arif Habib Corporation-led consortium.
According to FBR notification SRO 1129(I)/2026, the exemption includes Rs. 263.82 million in default surcharges and penalties related to withholding tax (other than salary) for the period from April to December 2024, as well as Rs. 4.03 billion related to advance income tax for the period from May 2024 to June 2025.
The FBR stated that this exemption is conditional upon PIACL paying its current income tax liabilities within four years, following a one-year grace period, in equal annual installments after the First Completion as defined in the Share Purchase and Subscription Agreement between the Government of Pakistan and the successful bidder. This move aims to facilitate the successful completion of PIACL’s divestment process, ensure timely execution of bid documents, and fulfill agreed-upon conditions.
The appointment of Lt Gen (retd) Anwar Ali Hyder as the new chairman is part of a broader restructuring aimed at improving operational efficiency and financial health. The FBR's decision to grant this tax waiver underscores the importance of ensuring smooth transition and execution in line with the terms of the divestment process.
PIACL’s current tax liabilities remain subject to final determination, but the exemption is expected to provide much-needed relief as the airline navigates its new management structure. The FBR's action is seen as a positive step towards stabilizing the corporation and ensuring it can focus on its core operations without the burden of past financial issues.
The waiver is intended to support PIACL in meeting its obligations under the divestment agreement, which includes paying off existing debts and liabilities. This relief could potentially reduce operational costs and improve cash flow, allowing the airline to invest more effectively in maintenance, modernization, and customer service.
