There is growing pressure on the government to lower taxes on labor visas, as businesses and industry leaders advocate for more favorable policies to support workforce mobility and economic growth.
The International Air Transport Association (IATA) has cautioned that airlines may find it difficult to distinguish passengers based on the specific types of visas they hold.
The International Air Transport Association (IATA) has formally reached out to the chairman of the Federal Board of Revenue (FBR) to address concerns over the complexities airlines face due to the new federal excise duty (FED) on labor visas for Gulf countries.
In its letter, IATA highlighted the difficulties airlines encounter in differentiating and verifying passengers based on their visa types, especially during check-in. Identifying labor visas at the point of ticket sales poses a significant challenge, the association noted.
Typically, airlines verify visas only at check-in, making it challenging to apply varying duties accurately. IATA has requested that the government either reduce the FED for economy class passengers traveling to Gulf and African countries or provide a discount on the FED for all such flights.
The association argued that these changes would streamline the process and alleviate the burden on airlines, which are struggling with compliance. IATA also pointed out the issue of rapidly changing fares, which further complicates the situation. The latest fare adjustments, effective from August 10, have exacerbated the challenges for airlines.
Given the short timeframe for implementing the new tax regime, IATA urged the government to allow at least six months for any changes to ticket taxes. The federal government recently introduced a fixed FED of Rs5,000 on air tickets for passengers traveling to Gulf countries on labor visas, as specified in a notification by the FBR on August 7. This tax applies to Pakistani passengers with labor visas, which must be printed on their passports and verified by the Protector of Emigrants, according to the FBR’s notice.
