Govt waives tax on PIA aircraft, equipment imports under FY26 budget

In a move aimed at speeding up the privatisation of the country's national flag carrier, the federal government of Pakistan has announced a sales tax exemption on aircraft imports and leasing for Pakistan International Airlines (PIA).

The tax waiver, outlined in the federal budget for 2025-26, is said to be granted as part of the government's ongoing efforts to lift the financial burden on the PIA, which has been in the loss-making phase over the past few years.

It should be noted that the new tax relief not only applies to the PIA aircraft but also to a broad range of aviation-related goods and equipment.

That said, seven major categories of aviation imports will benefit from a 0% customs duty provided in Pakistan's budget for the fiscal year 2025-26.

This includes complete aircraft, irrespective of imported ones or those acquired through agreements, spare parts for aircraft and simulators, maintenance kits for trainer aircraft, and specialised machinery for Maintenance, Repair and Overhaul (MRO) operations.

Furthermore, the exemption also covers aviation simulators, aircraft engines, and operational tools for new airport facilities.

Another notable development is that the aircraft import exemption for PIA has been backdated to March 19, 2015, which may offer retroactive benefits for the airline’s fleet acquisitions over the past decade.