Civil Aviation Authority Takes FBR to Supreme Court Over Rs. 50 Billion Tax Dispute

The Civil Aviation Authority (CAA) has taken its Rs. 50 billion tax dispute with the Federal Board of Revenue (FBR) to the Supreme Court. This comes after Sindh High Court’s recommendation to resolve the dispute through the Alternate Dispute Resolution Committee (ADRC) or the federal cabinet, which the CAA has declined. The Supreme Court is scheduled to hear the case on Wednesday, just as the FBR anticipates receiving Rs. 9.5 billion in advance income tax from the CAA by September 25, according to Express Tribune. CAA argues that, as a regulator, it should not be taxed as a state-owned entity. It cited exemptions under the Civil Aviation Act, 2023, and the Pakistan Airports Authority Act, 2023, for consideration on the matter. In contrast, FBR maintains that these exemptions do not override the Income Tax Ordinance, 2001 and that the CAA has to pay all the taxes it owes. FBR and the Ministry of Finance are pushing back against the Ministry of Law’s support for CAA’s tax exemption, and the case has likely added strain to the federal government’s efforts to meet its financial commitments. It bears mentioning that earlier this year, FBR recovered Rs. 29 billion from the Civil Aviation Authority.