FBR grants PIA tax relief to support privatisation process

The Federal Board of Revenue (FBR) has granted Pakistan International Airlines Corporation Limited (PIACL) exemption from default surcharge and penalties on income tax liabilities amounting to Rs8.76 billion to facilitate the airline’s ongoing privatisation process.

The exemption was notified through S.R.O. 799(I)/2026 issued on Tuesday under Section 183 of Income Tax Ordinance, 2001, following a federal cabinet decision dated December 31, 2025.

According to the notification, the exemption covers default surcharge and penalties linked to PIACL’s current income tax liabilities of Rs8,765,972,000, subject to final determination.

The FBR said the relief was granted to support timely completion of the airline’s divestment process, execution of bid documents and compliance with terms agreed between the government and successful bidders.

Officials said the arrangement was designed to remove financial obstacles that could affect completion of the transaction while ensuring recovery of government dues under the agreed legal framework.

Under the conditions set by the FBR, PIACL will be required to clear its current liabilities, calculated as of June 30, 2025, within four years.

The repayment plan includes a one-year grace period, after which the outstanding amount will be paid through equal annual instalments.

According to the notification, the repayment schedule will begin after “First Completion” as defined in the Share Purchase and Subscription Agreement signed between Government of Pakistan and the successful bidders.