Pakistan loses Canada’s support in Rs10bln tax default case

KARACHI: Canadian authorities have refused to cooperate with Pakistan in tax recovery from executives of defunct Shaheen Air International living in Canada, sources in Federal Board of Revenue (FBR) said on Thursday.

A senior official at the Large Taxpayers Unit Karachi said the FBR had approached the Canadian authorities for recovery of tax amount of around Rs10 billion.

However, the Canadian authorities have refused to help the Pakistani tax authorities.

The sources said owners/officials of Shaheen Air International left Pakistan after defaulting on the payments of various agencies. The airline also defaulted around Rs10 billion under the head of income tax, sales tax and federal excise. On June 21, 2018, the head office of Shaheen Air International was sealed on failure to make payment of around Rs1 billion under the head of federal excise duty that was collected by the airline from passengers of domestic and international. The airline’s domestic and international operations have been suspended since October 2018 as its 2,800 employees are seeking payment of their salaries for the past few months. They had held demonstrations in major cities.

Airlines operating in Pakistan are responsible for collecting Rs5,000 from air tickets of international passengers and Rs2,500 from domestic passengers. The airlines are also liable to deposit the collected amount from passengers to the national kitty within stipulate timeframe.

The FBR official said the tax authorities are framing charges of illegal transfer of money by the airline to a foreign destination to establish money laundering. “In this way the Canadian authorities shall be bound under international obligation,” the official added. At the same time authorities have launched criminal investigation against Shaheen Air International and its executive and directors for the recovery of losses to the tune of around Rs2 billion.

In this regard, Federal Investigation Agency (FIA) asked the FBR to provide details of income tax, sales tax and other tax related matters pertaining to the airline and its board members.

The FIA initiated anti-corruption inquiry lodged by Civil Aviation Authority against chief executive officer, directors and management of Shaheen Air International with the allegation that others in common criminal intention embezzled the amount of the Civil Aviation Authority. Officials at the FBR said the inquiry would pave way for the recovery of tax default amount of Rs10 billion against the airline.