ISLAMABAD: The Federal Board of Revenue (FBR) has waived penalties and default surcharge on tax liabilities amounting to Rs8.77 billion payable by Pakistan International Airlines (PIA), in a move aimed at facilitating the airline’s privatization process.
According to an official notification issued on Monday, the relief has been granted under Section 183 of the Income Tax Ordinance, 2001, following a federal cabinet decision dated December 31, 2025.
The federal government has exempted default surcharge and penalties on PIA’s tax liabilities totaling Rs8,765,972,000, subject to final determination. The decision is intended to ease financial pressures on the national carrier and support the timely execution of agreements with prospective investors during the divestment process.
Officials noted that the waiver forms part of broader efforts to streamline the privatization of PIA, which has struggled with persistent financial losses over the years.
However, the FBR clarified that the relief is conditional. PIA is required to settle its outstanding tax liabilities, recorded as of June 30, 2025, within four years. The repayment plan includes a one-year grace period, after which the remaining amount will be paid in equal annual installments.
The repayment schedule will begin after the “First Completion” stage, as defined in the Share Purchase and Subscription Agreement signed between the Government of Pakistan and the successful bidder.
Analysts believe the move will significantly reduce PIA’s financial burden and enhance its attractiveness to investors, marking a crucial step forward in the government’s privatization agenda.
