ISLAMABAD: The National Assembly’s Standing Committee on Finance on Thursday unanimously opposed a proposed 15-year tax exemption on aircraft imports and leasing for Pakistan International Airlines (PIA), questioning why the concession would be granted to the national carrier alone under its privatisation agreement.
The committee was reviewing the Finance Bill 2026-27 when lawmakers raised concerns over a proposal to exempt the import or lease of aircraft and related parts by the Pakistan International Airlines Corporation Limited (PIACL) from taxes for 15 years.
Pakistan Peoples Party (PPP) MNA Sharmila Faruqui said it would be unjust to provide a tax exemption to only one airline, while MQM lawmaker Muhammad Jawad Hanif Khan also opposed the move. Finance Secretary Imdad Ullah Bosal told the committee that the exemption had been approved by the International Monetary Fund (IMF) for 15 years. The committee subsequently summoned Privatisation Secretary Usman Akhtar Bajwa, who told lawmakers that bidders in PIA’s privatisation had sought tax exemptions on aircraft imports or leases and nine other items under the Sales Purchase Agreement (SPA). Bajwa said there was no specific mention in the agreement that the exemption would be available only to PIA. His remarks intensified concerns among lawmakers, who argued that granting the concession solely to PIA would place other airlines operating in Pakistan at a disadvantage.
Bosal said it had been difficult to secure IMF approval for the exemption and that extending it to the entire aviation sector would require fresh discussions with the Fund.
Bajwa warned the committee that withdrawing the incentive could jeopardise the PIA privatisation deal.
Federal Board of Revenue (FBR) Member Dr Hamid Ateeq Sarwar said the incentive had been proposed because PIA operated on 146 domestic and international routes, while other airlines served fewer destinations. Lawmakers, however, remained unconvinced and decided to keep the matter pending. The panel deferred tax exemption to the PIACL.
Separately, the committee approved a 5% withholding tax on revenues received from social media platforms and endorsed the abolition of surcharge on salary income. It also approved a 5% withholding tax on profits earned by policyholders under life insurance schemes within a seven-year period. The committee approved a special procedure for small traders and shopkeepers under Section 99-B, which will be available to retailers with annual turnover of up to Rs200 million.
