The Federal Board of Revenue has granted income tax exemption to Pakistan International Airlines Corporation Limited. The exemption covers default surcharge and penalties linked to current income tax liabilities amounting to Rs 8.765 billion. Consequently, PIA gets massive tax relief ahead of its privatization process. The FBR issued the exemption through S.R.O. 799(I)/2026 on Tuesday. According to the notification, the exemption falls under Section 183 of the Income Tax Ordinance 2001. A federal cabinet decision dated December 31, 2025 authorized this relief.

The FBR said the relief aims to facilitate the successful completion of the divestment process. It will help ensure timely execution of the bid documents and related terms. Therefore, PIA gets massive tax relief to attract potential buyers. Under the conditions of this exemption, PIACL’s current tax liabilities of Rs 8.765 billion as of June 30, 2025 will require payment to the FBR within four years after the first completion date. That completion date is defined in the Share Purchase and Subscription Agreement between the government and the successful bidders.

The repayment plan includes a one year grace period. After that, the liabilities will be paid in equal annual installments. This structured approach allows the airline to manage its cash flow during the transition period. PIA gets massive tax relief just as the government prepares to finalize its privatization. The national carrier has struggled with mounting debts and operational losses for years.

The government hopes the tax relief will make PIA more attractive to investors. A successful privatization could bring much needed efficiency and capital to the airline.