The International Air Transport Association (IATA) has formally reached out to the Federal Board of Revenue (FBR) chairman, raising concerns over the challenges airlines face due to the lack of federal excise duty (FED) differentiation for labour visas to Gulf countries.
In its letter, the IATA emphasized that airlines will struggle to differentiate and verify passengers based on the specific types of visas they hold, especially at check-in. It is very difficult for the airlines to identify the passengers who have labour visas while selling the tickets, it said further.
Generally, airlines only check and verify the visas presented by passengers at the time of check-in, which makes it difficult to apply varying duties accurately.
The association has requested that the government reduce the FED for passengers travelling in economy class to all Gulf and African countries. If this is not possible, there should be a discount on the FED for all economy class flights to Gulf countries, it suggested.
IATA said this would help streamline the process and reduce the burden on airlines that currently face difficulties ensuring compliance.
IATA further highlighted the issue of rapidly changing fares, which adds to the complexity. The most recent fare changes, implemented on August 10, following an update on August 7, have further complicated matters for airlines.
It said that it will become very difficult for airlines to implement the tax regime in such a short time, therefore, the IATA urged the government give at least six months for any change in ticket taxes.
On August 7, the federal government introduced a fixed Federal Excise Duty (FED) of Rs5,000 on air tickets for passengers travelling to Gulf countries under labour visas. This new tax was outlined in a notification issued by the Federal Board of Revenue (FBR).
According to the FBR's notice, a fixed tax of Rs5,000 will be applied to air tickets for Pakistani passengers holding labour visas to Gulf countries, as stated in Clause (i) of Sub-Clause (b) of Serial Number 3 of Table Two of the First Schedule to the Federal Excise Act 2005.
The FBR also clarified that the labour visa must be printed on the passengers' passports and verified by the Protector of Emigrants.
