ISLAMABAD: Members of the National Assembly Standing Committee on Finance and Revenue have expressed serious reservations over a proposal to grant a 15-year sales tax exemption to Pakistan International Airlines (PIA), warning that such a concession could undermine fair competition within the country’s aviation sector.
The issue surfaced during the committee’s clause-by-clause review of the Finance Bill 2026, where lawmakers examined a proposal allowing the recently privatized national carrier to import or lease aircraft, spare parts and related equipment without paying the standard 18 percent sales tax for a period of 15 years.
The discussion comes only months after Pakistan completed the long-awaited privatization of PIA by selling a 75 percent stake in the airline for Rs135 billion (approximately $482 million) to a consortium led by Arif Habib Corporation. The transaction is regarded as one of the most significant privatization deals in recent years and forms part of the government’s broader strategy to reduce the financial burden of state-owned enterprises and attract private-sector investment.
During the meeting, committee members stressed that tax policies should remain neutral and should not favor any particular company at the expense of others operating in the same industry. According to an official statement issued after the meeting, the committee chairman observed that tax measures should avoid creating market distortions or granting an undue competitive advantage to a single entity.
Members voiced concern that providing a tax concession exclusively to PIA could place other airlines at a disadvantage and create an uneven competitive environment within the aviation sector.
Secretary Aviation informed the committee that the proposed exemption was incorporated into the Share Purchase Agreement (SPA) negotiated with investors during the privatization process. Government officials maintained that the concession was designed to support PIA’s fleet expansion plans and enhance the airline’s long-term commercial viability.
However, the committee recommended that the government reassess the wider implications of the proposal and consider extending similar incentives across the aviation industry to ensure a level playing field.
PIA has long been among Pakistan’s most financially troubled state-owned enterprises, burdened by mounting losses, debt liabilities, operational inefficiencies and growing competition from private carriers. The successful privatization of the airline is being viewed as a major milestone in Pakistan’s economic reform agenda, particularly amid ongoing efforts linked to the country’s $7 billion International Monetary Fund (IMF) programme aimed at improving fiscal sustainability and restructuring loss-making public-sector entities.
