Tax commitment: FBR allows Shaheen Airline to resume flight operations

KARACHI: The Federal Board of Revenue (FBR) on Wednesday allowed Shaheen Air International Limited to restore its flight operation after the airline agreed to pay all its outstanding taxes to the board, sources said on Wednesday.

Early this week, FBR asked the Civil Aviation Authority (CAA) to stop flight operation of the carrier as it has failed in meeting its tax obligation. 

CAA sources confirmed that FBR asked the authority to stop the airline’s flight operation, but it couldn’t take an action. FBR later sent an intimation letter to CAA for restoring the airline’s flight operation after a tax payment agreement between the airline and the board.

Tax officials said the airline failed to deposit Rs700 million on account of federal excise
duty collected from tickets sale for July and August. The sources said the airline paid Rs100 million to avoid FBR’s action after a meeting at Large Taxpayers Unit, Karachi office between the FBR’s team and Shaheen Air’s management. The airline assured the team that arrears would be paid by next month, they added. 

FBR also attached the airline’s bank account and also attempted to seal its office on Tuesday evening, according to the sources. Officials said Federal Board of Revenue is empowered, under Sub Rule (c) of Rule 60 of FED Rules, 2005, to stop a flight operation until an airline pays its tax liabilities.

Shaheen Air’s officials said the FBR’s action was due to some confusion.  Zohaib Hassan, the airline’s chief marketing officer said all the issues with the tax authorities have been resolved and there is no interruption in flight operation. Hasan said the airline’s office was not sealed.

The staff is working round the clock, he added. “We are a law- abiding company and paying all the taxes on time.” FBR, in a letter to the aviation authority, said federal excised duty amounting to Rs345 million is recoverable from the airline for August and tax payment was due on October 16.

Officials said airlines operating in the country are required to collect federal excise duty from ticket buyers and deposit them to FBR’s bank accounts within a specified time.  FBR sources acknowledged that airlines usually drag feet on depositing the collected taxes to national exchequer.