The government has turned down a plan of granting five-year tax break to new authorities to look after the affairs of airports and aviation under outsourcing of major airports of the country.

The government plans to segregate Pakistan Civil Aviation Authority (PCAA) by setting up two separate authorities namely Pakistan Civil Aviation Regulatory Authority (PCARA) and Pakistan Airports Authority (PAA).

The Aviation Division had tabled a plan before the cabinet to grant tax exemptions to two new authorities for five years. However, the Federal Board of Revenue (FBR) had opposed this tax break.

The Aviation Division informed the cabinet in a recent meeting that it had earlier ratified two bills namely Pakistan Civil Aviation Authority Act, 2021, and Pakistan Airports Authority Act, 2021, on recommendations of the Cabinet Committee for Disposal of Legislative Cases (CCLC).

Subsequently, however, it was directed that the two bills be processed as ordinances.

The Law and Justice Division, while vetting the two draft ordinances advised the Aviation Division to get, approval in principle, of the federal cabinet in terms of Rule 16 (1) (a) read with Rule 27, Rules of Business, 1973.

Since the contents of the two draft ordinances were already cleared by the CCLC in the form of bills, exemption from re-submission of the draft ordinances before the CCLC was sought from the prime minister.

It was informed that necessary consultations with the relevant divisions were held and their comments/views were attached with the summary.

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

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

Two prepositions based on different viewpoints of relevant divisions requiring determination of the cabinet were; whether or not to add the words in either independent or joint user capacity section 1 (3) after the words ‘Defence Forces in Pakistan Airports Authority Ordinance (PAAO), 2021’, whether or not to retain two sections (section 36 in PAAO, 2021 and section 45 in Pakistan Civil Aviation Authority Ordinance (PCAAO), 2021) granting tax exemptions for five years to the new authorities.

The Aviation Division had requested a decision on these two clauses along with approval, in principle, of the federal cabinet for promulgation of the two ordinances.

The cabinet considered the summary submitted by the Aviation Division and rejected these two proposals. However, it approved the proposal for promulgation of the Pakistan Civil Aviation Authority Ordinance 2021 and Pakistan Airport Authority Ordinance 2021 of the summary.

Earlier, in August 2020, the Aviation Division had briefed the cabinet about outsourcing of major airports of the country. It had informed that under the restructuring plan, Pakistan Civil Aviation Regulatory Authority (PCARA) shall be entrusted with regulatory functions, while Pakistan Airports Authority (PAA) shall look after the commercial and operational assets of the airports.

It had further informed that the incorporation of two authorities shall be carried out in sync to ensure a smooth transaction and minimal impact on operations.

According to plan, it was informed that airports and air navigation assets will be transferred from existing Pakistan Civil Aviation Authority to the newly established Pakistan Airports Authority by law. Meanwhile, the process to outsource airports will be undertaken in two phases.

The title of lands shall remain with the state and will only be leased out, while air navigation and flight operations will also remain with the government.

The Aviation Division, in this regard, completed a few tasks assigned by the cabinet within the stipulated timeframe, while two draft bills were prepared and cleared by the CCLC.

The authorities concerned continue to work on proposed organograms, separate plans for manpower establishment, budget allocation and bifurcation of assets for both the entities.

Published in The Express Tribune, July 25th, 2021.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.