Islamabad, Pakistan – The Civil Aviation Authority (CAA) has escalated a tax dispute with the Federal Board of Revenue (FBR) to the Supreme Court of Pakistan. The CAA is challenging the FBR’s demand for Rs9.5 billion in advance income tax.
The dispute arose after the Sindh High Court directed the CAA and FBR to resolve the matter amicably through the Alternate Dispute Resolution Committee (ADRC) or the federal cabinet. However, the CAA has refused to participate in ADRC proceedings and opted to pursue the matter in the Supreme Court.
The FBR maintains that the CAA is liable to pay taxes under the Income Tax Ordinance, 2001. However, the CAA argues that it is exempt from taxes as a regulator under the Pakistan Civil Aviation Act, 2023, and the Pakistan Airports Authority Act, 2023.
The CAA’s claim for tax exemption is supported by the Ministry of Law and Justice. However, the FBR and the Ministry of Finance oppose this exemption, arguing that it violates the Income Tax Ordinance. Express Tribune
The FBR has successfully recovered approximately Rs29 billion from the CAA earlier this year. The outcome of the Supreme Court case will have significant implications for the FBR’s revenue collection efforts and the CAA’s financial obligations.
