Finance Bill 2024 Sweetens PIA Privatization

Finance Bill 2024 Sweetens PIA Privatization

Islamabad, June 18, 2024 – In a last-minute bid to attract investors for the privatization of Pakistan International Airlines (PIA), the government has included a key amendment in the Finance Bill 2024.

This change extends the period for carrying forward PIA’s business losses from six to ten years.

Sources close to the development have revealed that the amendment pertains specifically to the timeframe for offsetting business losses against future income. As per the current Income Tax Ordinance, 2001, businesses incurring losses can carry them forward and adjust them against taxable income for a maximum of six years.

The proposed amendment in the Finance Bill offers a significant advantage for potential PIA acquirers. The amended bill, losses incurred by PIA from the tax year commencing on or after January 1, 2017, can now be carried forward and offset against future profits for a period of ten years.

Tax experts believe this amendment is a strategic move designed to increase the attractiveness of PIA to potential investors. PIA has a history of significant financial losses, and the extended carry-forward period allows investors to utilize these losses to reduce their future tax liabilities. This translates to potential tax savings, making the acquisition of PIA a more financially appealing proposition.

While the specific details of the amendment haven’t been officially released, the intention is clear: to incentivize investors by offering a mechanism to lessen the initial financial burden associated with PIA’s takeover.

The success of this strategy remains to be seen. While the extended loss carry-forward period offers a financial benefit, it’s just one factor among many that potential investors will consider. The overall health of PIA’s operations, its future growth prospects, and the government’s overall privatization plan will all play a crucial role in attracting serious bids.

The Finance Bill 2024 is currently making its way through the legislative process. The inclusion of this amendment reflects the government’s commitment to PIA’s privatization and its willingness to address potential concerns of interested investors. The coming weeks will reveal whether this sweetener proves sufficient to entice buyers and pave the way for a successful privatization of Pakistan’s national flag carrier.