After short suspension, FBR unfreezes PIA bank accounts

• 50 PIA accounts were frozen by FBR to make a recovery of Rs4.135bn.
• PIA says move tarnished flag national carrier's image.
• Accounts restored after meeting between FBR chairman, PIA CEO.

KARACHI: The Federal Board of Revenue (FBR) on Tuesday froze Pakistan International Airlines (PIA) bank accounts over non-payment of federal excise duty (FED) on air tickets, but later restored them after it was assured of early payment of dues, The News reported Wednesday.

According to the apex revenue collector, PIA had to pay Rs4.5 billion in federal excise duty, which it has been charging its passengers on tickets for the last two years.

A total of 50 PIA accounts were frozen to make the recovery.

FBR has recovered Rs465 million so far and the accounts would remain frozen till recovery of another Rs4.135 billion, the sources had said initially.

However, according to the sources, the accounts of PIA were restored after a meeting between FBR Chairman Dr Ashfaq Ahmad and PIA CEO Arshad Malik.

“Accounts [have been] detached on the promise of an early payment of the outstanding amount,” said FBR spokesperson Asad Tahir.

Read more: PIA plans to rationalise employees-to-aircraft ratio

Earlier, PIA spokesperson Abdullah Hafeez said the Economic Coordination Committee (ECC) of the federal cabinet had decided to freeze PIA tax payments from 2016 to 2020 till the completion of the national carrier's reform process.

“Contrary to the decision of the federal cabinet, the decision to freeze PIA accounts by the FBR amounts to tarnishing the image of PIA,” he said.

He added that it would also smear the national flag carrier’s image around the world.

PIA paid Rs4.7 billion to the FBR in 2021, despite unfavourable conditions due to the coronavirus pandemic, Hafeez said, adding that all other 2021 arrears were already in the process of being paid in January 2022.

“It is incomprehensible to take such a step despite the fact that PIA is a national institution and owned by the Government of Pakistan,” he said.

Last year, the government had approved a restructuring plan for PIA in an effort to make the loss-making company a viable business. It included laying off excess workforce.

The airline has reduced its workforce from 550 per aircraft in 2017 to 260 per aircraft presently. It aims to bring the workforce within the international benchmark to 220 persons per aircraft in 2022.

As a part of the reforms process, the tax liabilities of PIA for the 2016-20 period were deferred by the ECC.

The beleaguered national flag carrier has been looking to reduce costs, particularly since the impact of the pandemic, as well as the fallout from a fake pilot credentials scandal, which resulted in a ban on its operations to Europe and some other overseas destinations over safety concerns.