The International Monetary Fund (IMF) has approved the waiver of the 18% sales tax on leased aircraft for Pakistan International Airlines (PIA). This move is expected to eliminate significant hurdles in the airline’s privatization process, which has been under pressure, particularly after a real estate developer bid just Rs. 10 billion for a 60% stake in October 2024, a sum far below expectations.
During a recent meeting, Deputy Prime Minister Ishaq Dar was updated on the situation, and government officials confirmed that the IMF’s approval would help PIA’s potential investors avoid the sales tax on new aircraft. This decision follows earlier demands from bidders to also write off Rs. 45 billion in liabilities, which has been a key point of concern.
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The restructuring plan for PIA, which involves transferring Rs. 623 billion in liabilities to a holding company, can now proceed without delay. The finance ministry also highlighted the international challenges posed by the sales tax and emphasized the importance of attracting foreign investment for PIA’s recovery. This approval is seen as a crucial step toward revitalizing Pakistan’s national flag carrier and securing its privatization.
