The International Air Transport Association (IATA) has formally expressed concerns to the Federal Board of Revenue (FBR) chairman regarding the challenges that airlines face due to the lack of differentiation in the federal excise duty (FED) for passengers traveling on labor visas to Gulf countries.
In its communication, IATA highlighted the difficulty airlines encounter in distinguishing and verifying passengers based on the type of visas they hold, particularly during the ticketing and check-in processes. The association pointed out that it is challenging for airlines to identify passengers with labor visas when selling tickets, as the verification of visas typically occurs at check-in.
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To address this issue, IATA has requested that the government reduce the FED for passengers traveling in economy class to all Gulf and African countries. Alternatively, if a reduction is not feasible, IATA suggested implementing a discount on the FED for all economy class flights to Gulf countries. This measure would help streamline the process and alleviate the burden on airlines, which are currently struggling to ensure compliance with the tax regime.
IATA also emphasized the additional complication posed by rapidly changing airfares. The recent fare adjustments, implemented on August 10 following an earlier update on August 7, have further complicated matters for airlines. Due to the complexity of these changes, IATA urged the government to allow at least six months for airlines to adjust to any new ticket tax regulations.
This issue arose after the federal government introduced a fixed FED of Rs5,000 on air tickets for passengers traveling to Gulf countries under labor visas, as detailed in a notification issued by the FBR on August 7. The FBR’s notification specified that this tax applies to air tickets for Pakistani passengers holding labor visas to Gulf countries, with the labor visa required to be printed on the passenger’s passport and verified by the Protector of Emigrants.
