NA body divided over tax exemption proposal for PIA

Members of a National Assembly parliamentary committee have expressed strong reservations over a proposed tax exemption for Pakistan International Airlines (PIA).

The proposal under consideration relates to tax relief on the import of new aircraft and spare parts for PIA. The matter sparked debate during a NA committee meeting, where members questioned the fairness and scope of the exemption.

Lawmakers recalled that under the privatisation agreement, tax exemptions on new aircraft and spare parts were included. However, concerns were raised about whether such concessions would distort competition in the aviation sector.

Committee member Sharmila Faruqi stated that if the market is to operate fairly, similar exemptions should also be extended to other airlines.

The PPP lawmaker questioned the rationale of including such concessions in the agreement and asked what role the committee was now expected to play in the process.

Chairman of the committee, Syed Naveed Qamar, noted that the aviation sector comprises five to six operators, warning that granting preferential treatment to one airline could undermine competitive balance. He questioned how other carriers could compete if one was given an advantage.

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FBR officials briefed the committee that there would be no aircraft imports for PIA next year and raised the question of whether the exemption should be granted indefinitely. They also suggested that any such exemption could be capped, for example at five or ten years.

Officials further stated that PIA’s handover and takeover process is expected to take place in July. They added that while a one-year exemption currently exists, the airline is reportedly seeking a longer period of up to 15 years, which has also drawn criticism from other airlines.

Committee members also raised concerns over whether such exemptions should be permitted under international financial arrangements, with FBR officials stating that the matter had been cleared with the International Monetary Fund (IMF).

The committee has summoned Privatisation Adviser Muhammad Ali to appear in the next meeting for further clarification.