ISLAMABAD: The National Assembly Standing Committee on Finance Thursday deferred a major budgetary proposal to solely grant sales tax exemption on the import of aircrafts and its parts by Pakistan International Airlines Corporation Limited (PIACL) and directed the government to allow all airlines the same exemption or withdraw the proposed exemption to only one airline.
However, Secretary Privatization Commission categorically informed the committee that if we withdraw the said proposed exemption from the Finance Bill 2026, the deal of PIACL privatization would be ended.
Last week, Senate Standing Committee on Finance had already opposed the said sales tax exemption.
During review of Finance Bill 2026 on Thursday, Chairman of the committee Naveed Qamar objected that the committee did not want to create a monopolistic-like situation for the PIACL. On one hand, the government does not want to violate the agreement signed with the PIACL. On the other hand, we do not want to create discriminatory treatment for other airlines. “The government has to make the decision. Either go back or give the proposed relief to all airlines”, Naveed Qamar added.
There are 3-5 players in the aviation industry and other airlines cannot compete with the PIACL after this exemption. The said airline will enjoy a different price as compared to other airlines while purchasing aircrafts and its parts. In the presence of such exemption, other airlines cannot compete in the market, he said.
Naveed Qamer clarified that the committee is not asking to withdraw the said exemption, but to give it to all airlines.
Committee directed the Secretary Privatization Commission to immediately appear before the committee and clarify the situation.
Secretary Finance called officials of the Privatization Commission and later Secretary Privatization joined the committee proceedings and submitted his response.
Minister of State for Finance Bilal Azhar Kayani stated that the sales tax exemption of 15 years has been proposed as per privatization agreement with the airline.
If we withdraw the said proposed exemption, it would be the violation of the agreement, Kayani said.
Minister of State for Finance said that the government can take up the matter with the International Monetary Fund (IMF) during technical discussions, seeking exemption for other airlines.
Federal Secretary Ministry of Finance informed the committee that the government had to convince the International Monetary Fund (IMF) to obtain approval of this exemption within the context of the privatization process.
This exemption has been specifically cleared from the IMF, Secretary Finance added.
Secretary Privatization Commission informed the committee that the sales tax exemption on specific terms was part of the sales/purchase agreement on privatization. During negotiations with four investors/bidders to finalize terms and conditions, the bidders specifically requested for sales tax exemption on specific items (Nine items list finalized). There were multiple rounds of negotiations with the bidders.
Copyright Business Recorder, 2026
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