FBR freezes PIA’s bank accounts amid EASA audit

KARACHI: The Federal Board of Revenue (FBR) has frozen Pakistan International Airlines’ (PIA) bank accounts over non-payment of taxes amid an ‘all-important’ audit from the European Aviation Safety Agency (EASA), ARY News reported on Wednesday, citing sources.

A delegation of the European Commission and European Aviation Safety Agency (EASA) is currently in Pakistan, raising hopes that a ban imposed on Pakistan International Airlines (PIA) flights to the continent may be lifted.

The ban was imposed after May 2020 plane crash in Karachi and a statement made by the then aviation minister, Ghulam Sarwar Khan, in the parliament, telling the house that a large number of commercial pilots held fake licences or had cheated in exams.

While he later retracted the statement, EASA decided to extend the ban indefinitely.

Due to the EASA ban, the national carrier has suffered Rs170 billion loss since restrictions were imposed on the airlines.

Amid the all-important EASA audit, the Federal Board of Revenue (FBR) freeze PIA’s all bank accounts in an effort to recover an outstanding tax amount of over Rs2.76 billion.

The Large Taxpayers Office (LTO) Karachi, the primary revenue-collecting arm of the FBR, issued notices instructing banks to maintain the freeze on the accounts until the recovery of the unpaid amount.

LTO Karachi informed the banks that PIA owed a significant sum of Rs2.76 billion in unpaid Federal Excise Duty (FED). The airline, acting as a withholding agent, collects FED at the time of ticket sales.

Sources told ARY News that the national carrier has not filed its tax returns since February 2024.

Meanwhile, Pakistan State Oil (PSO) also threatened the national carrier of stop supplying fuel to airplanes over non-payment of dues. The PSO has demanded immediate payment of Rs1.5 billion from PIA, sources added.

In a statement, PIA spokesperson regretted ‘unfortunate’ actions of FBR and PSO amid EASA audit, saying that a ban imposed on Pakistan International Airlines flights to the continent may be lifted following the audit.

PIA has been grappling with financial challenges for several years, and this recent action by the FBR highlights the severity of the situation.