PIA’s Bank Accounts Frozen by FBR Due to Unpaid Taxes

In a pivotal development, the Federal Board of Revenue (FBR) has taken decisive measures against Pakistan International Airlines (PIA), freezing all its bank accounts due to outstanding taxes amounting to over Rs2.76 billion. This move comes amidst a crucial audit conducted by the European Aviation Safety Agency (EASA), a process that holds significant implications for PIA’s future operations.

A delegation comprising representatives from the European Commission and EASA is presently in Pakistan, sparking optimism that the longstanding ban on PIA flights to Europe may soon lifted.

The ban originally imposed in the aftermath of a plane crash in Karachi in May 2020 and controversial statements made by the then aviation minister, Ghulam Sarwar Khan, regarding the authenticity of pilots’ licenses. Despite subsequent retractions, EASA opted to extend the ban indefinitely, leading to substantial financial losses amounting to Rs170 billion for the national carrier.

In response to the pressing EASA audit, the FBR’s Large Taxpayers Office (LTO) in Karachi has taken stringent action to recover the outstanding tax amount. Notices have issued instructing banks to uphold the freeze on PIA’s accounts until the full recovery of the unpaid sum. The specific tax in question is the Federal Excise Duty (FED), which PIA, as a withholding agent, collects during ticket sales. Alarmingly, it has revealed that PIA has not filed its tax returns since February 2024, contributing to the gravity of the situation.

Adding to PIA’s woes, the Pakistan State Oil (PSO) has also issued a stern warning, threatening to halt fuel supplies to PIA’s airplanes over non-payment of dues amounting to Rs1.5 billion. In response to these challenges, a PIA spokesperson expressed regret over the “unfortunate” actions of the FBR and PSO during the EASA audit. However, the spokesperson remains hopeful that the audit may pave the way for the lifting of the flight ban to Europe.