Govt urged to reduce tax on labour visas for Gulf countries

The International Air Transport Association (IATA) has formally communicated its concerns to the Chairman of the Federal Board of Revenue (FBR), addressing the challenges encountered by airlines due to the absence of federal excise duty (FED) differentiation for labor visas to Gulf countries.

In its correspondence, the IATA underscored the difficulties airlines face in distinguishing and verifying passengers based on the specific categories of visas they possess, particularly during the check-in process. It further noted the significant challenge airlines encounter in identifying passengers with labor visas while ticket sales are in progress.

Typically, airlines only verify the visas presented by passengers at the time of check-in, complicating the accurate application of varying duties.

The association has proposed a reduction in the FED for passengers traveling in economy class to all Gulf and African nations. Should this reduction be unfeasible, it suggested the implementation of a discount on the FED for all economy class flights to Gulf countries.

The IATA believes that such measures would simplify the process and alleviate the current compliance challenges faced by airlines.

Additionally, the IATA highlighted the issue of fluctuating fares, which further complicates the situation. The most recent fare adjustments, implemented on August 10 following an update on August 7, have exacerbated the difficulties for airlines.

It was noted that the short timeframe for implementing the tax regime poses a significant challenge. Consequently, the IATA has called for a minimum of six months to be allocated for any changes in ticket taxes.

On August 7, the Federal Government introduced a uniform fixed Federal Excise Duty (FED) of Rs5,000 on air tickets for passengers traveling to Gulf countries with labor visas. This decision was made in a notification issued by the Federal Board of Revenue (FBR).

The FBR has clarified that a fixed tax of Rs5,000 will be levied on air tickets for Pakistani passengers holding labor visas to Gulf countries, as specified in Clause (i) of Sub-Clause (b) of Serial Number 3 of Table Two of the First Schedule to the Federal Excise Act 2005.

Furthermore, the FBR has stated that the labor visa must be prominently displayed on the passport of the passenger and verified by the Protector of Emigrants.