Senate Committee Recommends Aircraft Tax Relief for All Airlines
The Senate Standing Committee on Finance has recommended extending proposed sales tax exemptions on aircraft imports and related parts to all airlines operating in Pakistan, rather than limiting the relief to Pakistan International Airlines Corporation Limited (PIACL).
The recommendation was made during the committee’s review of the Finance Bill 2026-27, where members completed clause-by-clause consideration of proposed amendments to the Sales Tax Act and the Federal Excise Act.
Committee Chairman Senator Saleem Mandviwala expressed concerns over granting the exemption exclusively to PIACL, stating that equal treatment should be provided across the aviation sector. He noted that extending the relief to all eligible airlines would help ensure a level playing field within the industry.
The committee advised the Ministry of Finance, the Tax Policy Unit, and the Federal Board of Revenue (FBR) to revise the proposal and include all airlines in the relevant exemption framework.
Finance Minister Muhammad Aurangzeb explained that the original proposal was linked to the ongoing privatisation process of PIACL and aimed to facilitate the acquisition of aircraft under that initiative. He added that any broader tax relief measure may require consultation with international stakeholders, including the International Monetary Fund (IMF).
Following discussions, the committee agreed to recommend expanding the proposed exemption to cover all eligible airlines.
During the meeting, lawmakers also reviewed and approved several other tax-related measures. These included proposals aimed at supporting the digital transformation of the FBR and the implementation of a faceless Inland Revenue system.
The committee further discussed arrangements related to the upcoming Shanghai Cooperation Organisation (SCO) summit and sought additional details regarding security-related transportation requirements.
In addition, members approved the inclusion of new items in the Third Schedule of the Sales Tax Act, under which sales tax will be collected based on printed retail prices. The committee also endorsed amendments allowing the auction of seized goods through an electronic auction system.
The recommendations will now be considered as part of the broader legislative process for the Finance Bill 2026-27.
