PIA not paying taxes, ECC told

Pakistan International Airlines (PIA) is reportedly not paying taxes to the government despite collecting Federal Excise Duty (FED) on the issuance of tickets, well-informed sources told Business Recorder. This was disclosed at a recent meeting of Economic Co-ordination Committee (ECC) of the Cabinet chaired by the Finance Minister Senator Ishaq Dar.
Aviation Division revealed that the liquidity crises of PIACL had been continuing for several years. The addition of aircraft had improved the flight regularity and operational efficiency of the airline but revenue could not be augmented due to low yields and excess capacity.
Despite these limitations, PIACL pulled along in 2016 with the support of the government. It was further revealed that the recent crash incident of Pk-661 had drastically impacted on the airline both in financial and operational terms.
According to the Aviation Division, the situation was getting worse as PIACL had not been able to pay to the lessors which may result in grounding of aircraft or lead to default. Similarly, PSO receivables had ballooned and fuel supplies had been refused. Saudi Arabia Civil Aviation Authority (GACA) had also threatened to stop PIA's operations in case of further non-payment. Aviation Division stated that an amount of Rs 6.746 billion was required to meet various overdue liabilities; and revealed that PIA needs support to repay its loan instalments and mark-up from 1st January 2017 until 30th June 2017 amounting to Rs 24.944 billion.
Aviation Division requested the ECC of the Cabinet to: (i) increase the GoP guarantee limit of PIACL by PKR 10.5 billion from PKR 151 billion to PKR 161.5 billion; and (ii) ask the Ministry of Finance to assist PIACL in arranging loans from banks on the terms and conditions to be finalised by the Ministry.
The ECC extensively discussed the operational efficiency, financial health and other management issues of PIACL.
On the proposal of Minister for Planning, Development and Reform, Ahsan Iqbal Chairman ECC, constituted a committee to develop a business plan for the PIACL. Secretary, Economic Affairs Division suggested that the governance structure of the PIACL should also be examined.
The committee comprising Minister for Planning, Development and Reform (Convener), Special Assistant to the Prime Minister on Revenue, Chairman Privatisation Commission and Secretary, Economic Affairs Division and Secretary, Aviation Division was tasked to develop operational and business plan for the PIACL. The committee has already held a meeting to tailor a business plan for the PIA.
Chairman, Federal Board of Revenue pointed out to the ECC that PIA was not paying taxes to the FBR despite the fact that the Federal Excise Duty was being collected at the time of issuing the airline ticket. In addition, the PTA was also not paying taxes that are deducted from the salaries of the PIA Employees. The ECC directed the Chief Financial Officer of PIACL to immediately carryout reconciliation of outstanding taxes and other dues with Federal Board of Revenue.
After a detailed discussion, the ECC approved the proposal and directed the Aviation Division to ensure that the amount be utilised strictly in accordance with the proposal.
The ECC of the Cabinet directed the Aviation Division [Chief Financial Officer (PIACL)] to immediately carry out reconciliation of the outstanding taxes and dues with the Federal Board of Revenue (FBR).