ISLAMABAD: The Federal Board of Revenue (FBR) has granted an income tax exemption to Pakistan International Airlines Corporation Limited (PIACL), providing relief aimed at facilitating the airline’s ongoing divestment process.
The exemption has been granted to PIACL in respect of default surcharge and penalties on its current income tax liabilities amounting to Rs8,765,972,000.
The FBR issued a notification, S.R.O. 799(I)/2026, on Tuesday formalising the decision. According to the notification, issued in exercise of the powers conferred under Section 183 of the Income Tax Ordinance, 2001, and in pursuance of the federal cabinet’s decision dated December 31, 2025, the federal government has exempted PIACL from payment of default surcharge and penalties relating to its current tax liabilities of Rs8,765,972,000, subject to final determination.
The notification stated that the exemption has been granted in order to successfully conclude the process of divestment of PIACL to the successful bidder, ensure timely execution of the bid documents and secure compliance with the terms and conditions contained therein.
According to the FBR, the exemption is intended to remove financial hurdles that could otherwise affect the completion of the transaction and the implementation of the divestment framework approved by the government.
The exemption will, however, remain subject to specific conditions. Under the terms laid down by the FBR, the current liabilities of PIACL, amounting to Rs8,765,972,000 as of June 30, 2025, will have to be paid to the Federal Board of Revenue within a period of four years.
The payment schedule allows a grace period of one year, after which the outstanding amount will be paid in equal annual instalments. The FBR clarified that the repayment period will commence after First Completion, as defined in the Share Purchase and Subscription Agreement signed between the Government of Pakistan and the successful bidders.
Officials said the arrangement has been structured to ensure that the privatisation process moves forward without disruption while also safeguarding the recovery of government revenue in accordance with the agreed legal and financial framework.
