The Federal Board of Revenue (FBR) has taken action to freeze all bank accounts of Pakistan International Airlines (PIA) due to non-payment of federal excise duty, adding to the airline’s ongoing financial challenges.
FBR officials report that PIA’s outstanding liabilities for federal excise duty have reached Rs55 billion up to September 2023. Despite repeated notices, the airline has failed to address these obligations. Furthermore, the tax liabilities for October 2023 remain unresolved as tax returns for that month are yet to be filed.
The Large Taxpayers Unit (LTU) in Karachi, a subsidiary of FBR, executed the freezing of PIA’s accounts with the aim of recovering the outstanding tax liabilities. Already, an amount of Rs1.5 billion has been recovered and deposited into the national treasury. Banks have been instructed to promptly transfer any funds received in PIA’s accounts to the FBR’s treasury accounts.
Recent reports indicate that PIA has not filed returns since February, and a tribunal’s order requires the airline to promptly pay Rs2.77 billion. The freezing of accounts occurred two days before the end of the month, deviating from the usual practice of such actions taking place on the month’s last day.
It is pertinent to mention here that last month, PIA faced operational disruptions, including flight cancellations and delays, due to unpaid dues to the state’s oil marketing company, Pakistan State Oil (PSO). Reports from Bloomberg highlight that PIA’s liabilities stand at Rs743 billion (approximately $2.5 billion), surpassing its total assets by five times.
PIA sought additional borrowing of over Rs7 billion from banks amid concerns about potential flight operation suspensions amidst a severe financial crisis. The airline has approached the Aviation Division for immediate loans, including a government-guaranteed option for securing Rs7.5 billion.
