Government Urged to Lower Tax on Labor Visas
Airlines May Struggle to Distinguish Passengers by Visa Type, Says IATA
The International Air Transport Association (IATA) has formally contacted the Federal Board of Revenue (FBR) chairman, expressing concerns about the difficulties airlines face due to the absence of differentiation in the federal excise duty (FED) for labor visas to Gulf countries.
In its communication, IATA highlighted the challenges airlines encounter in distinguishing and verifying passengers based on their visa types, particularly at the check-in stage. The letter pointed out that airlines struggle to identify passengers holding labor visas during the ticketing process, making it difficult to apply different duties correctly.
Typically, airlines verify visas when passengers check in, which complicates efforts to apply varying duties based on visa categories.
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IATA has requested the government to reduce the FED for economy class passengers flying to Gulf and African nations. If a full reduction is not feasible, IATA proposed offering a discount on FED for economy flights to Gulf countries to ease the burden on airlines and streamline their operations.
The association also raised concerns over rapidly fluctuating fares, which complicate compliance further. Recent fare changes, introduced on August 10 after an update on August 7, have only added to the complexity.
IATA stated that airlines would find it increasingly difficult to implement such tax changes in a short time frame and urged the government to allow at least six months for any adjustments to ticket taxes.
On August 7, the federal government introduced a fixed FED of Rs5,000 on air tickets for passengers traveling to Gulf countries under labor visas, as outlined in a notification from the FBR.
According to the FBR notice, this Rs5,000 tax will be levied on air tickets for Pakistani passengers holding labor visas to Gulf countries, as per 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 further clarified that labor visas must be printed on passengers’ passports and verified by the Protector of Emigrants.
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