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FBR recovers Rs970 million in outstanding tax amount from PIA

By Shahnawaz Akhter
June 23, 2018

KARACHI: The Federal Board of Revenue (FBR) recovered around one billion rupees in outstanding tax amount from ailing state-owned Pakistan International Airlines (PIA) through drawing it from an international funds transfer to the airline, officials said on Friday.

The airline’s spokesman said he doesn’t have knowledge of the tax recovery, but he accepted that there were tax nonpayment issues.

Large Taxpayers Unit (LTU) Karachi recovered Rs970 million from the airline, the officials said.

Tax officials said the national flag carrier is tax defaulter of Rs2.5 billion for the two months under the head of federal excise duty collected from passengers on air tickets. The amount was not transferred to the FBR, they added.

Last week, the LTU wrote a letter to the International Air Traffic Association (IATA), seeking tax recovery from the payment made to the PIA every two months in lieu of interline transactions between the world’s airlines, aviation companies and travel partners.

The FBR’s largest tax collection department asked IATA Pakistan to deposit PIA’s present and future proceeds from billing and settlement plan (BSP) to the government treasury through pay order/demand draft in favour of LTU Karachi.

“Till further instructions, no BSP proceeds for IATA settlement should be directed to PIAC till the recovery of the amount,” the department said in the letter.

PIA spokesman Mashood Tajwar said he was unaware about the recovery.

Tajwar clarified that none of the bank accounts of the airline was frozen. The airline wants smooth business activity, he added.

Tax officials said failure of non-payment of federal excise duty is the violation of the Federal Excise Act 2005. In 2013, the Economic Coordination Committee of the cabinet made it mandatory for the PIA to deposit the duty into the government treasury on fortnightly basis.

PIA has been incurring losses for the last couple of years. It incurred Rs26 billion and Rs32 billion in losses alone in 2017 and 2016, respectively.

Previous government had attempted to privatise the loss-making airline, but opposition parties opposed the privatisation efforts.

The last government of Pakistan Muslim League even penciled in April 15 as the deadline to privatise the airline. Yet, the plant couldn’t succeed.

The then privatisation minister Daniyal Aziz said the government would have to privatise the PIA under the Pakistan International Airlines Corporation Act 1956.

Under the law, the airline’s management control would, however, continue to remain in the hands of the federal government and that it would not be able to divest more than 49 percent shares to a third party.

The government would only privatise air transport business of the PIA and rest of the business of the airline would be given to another company on contractual basis.