PIA to benefit from sales tax exemptions on aircraft imports, leasing under new budget

The federal government has introduced a measure to exempt Pakistan International Airlines (PIA) from sales tax on aircraft imports and leasing as part of efforts to support the national carrier’s privatization process. 

The sales tax exemption will apply not only to aircraft but also to a range of aviation-related goods and equipment. 

Under the new policy, seven key categories of aviation imports will receive zero percent customs duty treatment. These categories include complete aircraft—whether imported or acquired through wet or dry lease agreements—spare parts for aircraft, simulators, maintenance kits for trainer aircraft, and specialized machinery for Maintenance, Repair, and Overhaul (MRO) operations.

The exemption, outlined in the federal budget for FY 2025-26, aims to provide financial relief to PIA, which has been facing ongoing financial challenges.

In addition, the exemption will cover aviation simulators, aircraft engines, and operational tools for new airport facilities. For PIA, the aircraft import exemption has been backdated to March 19, 2015, which could offer retroactive benefits for the airline’s fleet acquisitions over the past decade.

This tax relief is seen as a key step to facilitate PIA’s privatization, aiming to improve its financial health and operational efficiency.