Pakistan Grants Controversial Tax Breaks to Aviation Authorities

Pakistan's government recently approved a significant tax exemption for two government entities, the Pakistan Civil Aviation Authority (PCCA) and the Pakistan Airports Authority (PAA). This decision has sparked controversy as it raises concerns about violating both the IMF's program and Pakistan's own tax laws.

Key Points:

• Rs50 Billion Annual Exemption: The tax break grants an exemption of Rs50 billion annually to both aviation authorities.
• IMF Program Violation: This exemption allegedly contradicts the terms of Pakistan's agreement with the IMF.
• Tax Law Dispute: The legality of the exemption is debated. The Income Tax Ordinance of 2001 (Section 54) seemingly prohibits such exemptions unless granted under the ordinance itself.
• Legal Backing for Exemption: The Ministry of Law and Justice argues that newly passed Acts (Pakistan Civil Aviation Authority Act & Pakistan Airports Authority Act, both in 2023) supersede the Income Tax Ordinance in this case.
• FBR Disagrees: The Federal Board of Revenue (FBR) maintains that the new Acts don't qualify as "special laws" for taxation purposes, making the exemption unlawful.
• Impact on Tax Collection: This controversy comes amidst the FBR's efforts to collect Rs879 billion in taxes by March end.

Unresolved Dispute:

The disagreement between the FBR and the Law Ministry regarding the legality of the tax exemption remains unresolved. This situation could potentially affect Pakistan's future negotiations with the IMF and its overall tax collection efforts.

This article was published at Pakistan Grants Billions in Tax Breaks to Aviation Authorities, Raising Concerns