NA panel defers PIA tax exemptions, asks government to revisit 15-year relief

The National Assembly Standing Committee on Finance on Thursday deferred approval of proposed tax exemptions for Pakistan International Airlines, asking the government to either withdraw the concessions or extend similar relief to all airlines, The Express Tribune reported. 

The committee, chaired by Pakistan Peoples Party’s Syed Naveed Qamar, was conducting clause-by-clause consideration of the Finance Bill 2026-27.

The matter was deferred after Secretary Privatisation Usman Bajwa told the committee that the new buyers of Pakistan International Airlines had not sought exclusive preferential treatment. He said their demand was for 15 years of concessions to ensure policy consistency.

Bajwa said the decision to grant tax exemptions only to Pakistan International Airlines for 15 years was taken by the government. He was called to brief the committee after the finance ministry proposed an 18% sales tax exemption only for Pakistan International Airlines on the procurement and lease of aircraft.

The privatisation secretary said bidders had sought tax concessions, and nine items would be incorporated into the law. He warned that the transaction could collapse if the government did not provide the agreed exemptions to the buyers.

Minister of State for Finance Bilal Azhar Kayani said withdrawing the exemptions was not an option as it would violate the sale-purchase agreement. He said the government would take up the matter again with the International Monetary Fund and report back to the committee.

Qamar said the government had to decide whether to withdraw the proposed exemption or extend it to all airlines, keeping in view Pakistan’s commitments under the International Monetary Fund programme.

MNA Sharmila Faruqi opposed preferential treatment for Pakistan International Airlines’ buyers, saying it would discriminate against existing private airlines as well as any new airlines entering the market.

Secretary Finance Imdadullah Bosal said the exemptions had been included in the Finance Bill on the recommendation of a committee headed by Deputy Prime Minister Ishaq Dar. He said the prime minister had constituted the committee to ensure that buyers did not receive any additional incentive.

Bosal said the deal would be formally closed by mid-July if the proposed exemptions were approved. He said the finance ministry had made considerable efforts to secure International Monetary Fund consent for the Pakistan International Airlines exemption, and extending the same treatment to the entire aviation sector would be difficult.

Under the proposal pending final vote, the import or lease of aircraft and parts by PIACL would be exempt from 18% sales tax. Customs duty would also not apply to aircraft imported or acquired through wet or dry lease.

Qamar said the government should exclude the 15-year cost of the tax exemptions from the total sale price of Pakistan International Airlines.

The Arif Habib-led consortium acquired a 100% stake in Pakistan International Airlines for Rs180 billion. According to publicly available information, Arif Habib Corporation and Fatima Fertiliser Company jointly hold 34.1% in the national carrier, Fauji Fertiliser Company holds 34%, Lake City Holdings 14%, AKD Group 10.25% and City Schools 7.65%.