FBR freezes, later restores PIA accounts

Move reversed after airline CEO meets tax body head; national carrier tax defaulter of Rs26b

ISLAMABAD:

The Pakistan International Airlines has been found to be a tax defaulter of Rs26 billion, prompting the Federal Board of Revenue (FBR) to freeze 53 bank accounts of the national carrier, only to restore them later in the day after the airline’s CEO met with the tax body’s chief.

The development came after meeting between FBR Chairman Dr Muhammad Ashfaq and PIA CEO Arshad Malik.

The PIA CEO assured the FBR that airline would continue paying its arrears despite the challenges it was facing and consult with the cabinet for guidance.

The freezing of the accounts would have affected the countryside operations of the airline.

There were also plans to issue arrest warrants for the PIA managing director for the recovery of dues.

A senior official of the FBR told The Express Tribune that the action had been taken by the bureau’s Large Taxpayer Unit (LTU) in Karachi.

The official, requesting anonymity, disclosed that a paltry sum of Rs495 million had been withdrawn from the PIA’s bank accounts for the recovery of tax dues.

The PIA has not been submitting its federal excise duty returns since December 2020.

According to sources, the tax authorities were giving concession to it for more than a year considering that it was the national flag carrier.

Also read: PIA owed Rs22b to CAA, PAC panel told

A PIA spokesperson said in a statement that there was decision to freeze the amount of taxes from 2016 to 2020 until the cabinet reforms.

“The FBR's decision to freeze the accounts contradicts the federal cabinet's decision and is an attempt to tarnish the PIA’s reputation. It will dent the airline on a global level,” the spokesperson added.

In September last year, the government had approved a Rs44 billion bailout package for the Pakistan PIA in the shape of cash and sovereign guarantees after its failure to bring any improvement to the financial condition of the national flag carrier in three years.

The amount of Rs44 billion has been provided amid mounting losses of the PIA that reached Rs542 billion by June last year.

In order to facilitate the borrowing, the ECC had extended the guarantee limit from Rs226 billion to Rs247.6 billion.

The money will be borrowed from commercial banks on the back of sovereign guarantees of the finance ministry.

The PIA management had informed the ECC that its daily revenue had come down to Rs50 million to Rs70 million from the Rs400 million before the airline was struck by Covid-related restrictions and a ban imposed by the European Union.

The restructuring plan of PIA was presently stuck due to delay in finalisation of a business plan by IATA Consulting, it had added.

Due to reckless statements by the aviation minister about fake licences of PIA pilots, the airline was banned from flying to many international cities, which aggravated its financial problems.