Tuesday, February 7, 2023

Government refuses tax reduction plan

The government rejected a plan to grant five-year tax incentives to new authorities to take care of the airport and aviation business in outsourcing the main airports in the country.

The government intends to divide the Pakistan Civil Aviation Authority (PCAA) into two independent agencies, the Pakistan Civil Aviation Regulatory Authority (PCARA) and the Pakistan Airports Authority (PAA).


The Aviation Division proposed to the government a five-year tax exemption for two new bodies. However, the Federal Revenue Service (FBR) was opposed to the tax cut.


The Aviation Division informed the cabinet at a recent meeting that it had already ratified two bills, the Pakistan Civil Aviation Authority Act of 2021 and the Pakistan Airport Authority Act of 2021, on Committee recommendations of the Office for the Elimination of Legislative Cases (CCLC).

Later, however, it was ordered that the two projects be processed as ordinances.

The Law and Justice Division, in examining the two draft decrees, advised the Aviation Division to obtain, in principle, the approval of the federal cabinet under Rule 16 (1) (a) dealing with Rule 27, Rules of Business, 1973.

Since the content of the two ordinance bills had already been approved by the CCLC in the form of bills, the Prime Minister was asked to waive the resubmission of the ordinance bills to the CCLC.

It was informed that necessary consultations with the relevant divisions had been carried out and their comments/opinions were attached to the summary.


The two main remarks were from the Pakistan Ministry of Defense / Air Force (PAF) for adding new words at the end of Section 1 (3) of Pakistan Airport Authority Regulation (PAAO), 2021, for further elaboration/clarity and that of FBR that opposes tax exemptions (section 36 of the Pakistan Civil Aviation Authority (PCAAO) Ordinance, 2021, and section 45 of PA 2021).

The Aviation Division / PCAA has endorsed the existing provisions already approved by the CCLC / cabinet.

Two prepositions based on different views of relevant divisions that require cabinet determination were; whether or not to add the words in section 1 (3) of independent or joint user capability after the words “Pakistan Defense Forces Ordinance (PAAO), 2021”, whether or not to maintain two sections (section 36 in PAAO, 2021 and section 45 of the Pakistan Civil Aviation Authority Ordinance (PCAAO, 2021) that grants tax exemptions for five years to new authorities.

The Aviation Division had requested a judgement on these two articles, as well as the federal cabinet’s permission in principle for the publication of the two laws.

The cabinet examined the Aviation Division’s report and rejected these two suggestions. It did, however, accept the planned publication of Ordinance 2021 of the Pakistan Civil Aviation Authority and Ordinance 2021 of the Pakistan Airport Authority.

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