The Federal Board of Revenue (FBR) has announced a new fixed federal excise duty (FED) of Rs. 5,000 per air ticket for passengers traveling to Gulf Cooperation Council (GCC) countries on labor visas. This significant move aims to streamline tax collection from international laborers and boost federal revenues.
Official Notification and Details
On Wednesday, the FBR issued S.R.O. 1191(I)/2024, officially notifying the imposition of this excise duty. According to the notification, the FED will be levied on a fixed basis of Rs. 5,000 per ticket. This replaces the variable amount previously specified in sub-clause (i) of clause (b) of serial number 3 of Table-II of the First Schedule to the said Act.
Verification Process
To ensure proper implementation, the FED will only apply to passengers holding labor visas, which must be printed on their passports and verified by the Protector of Emigrants (Bureau of Emigration and Overseas Employment). This measure aims to prevent any misuse of the policy and ensure that the duty is collected from the intended group of travelers.
Impact on Laborers and the Economy
This new tax directly affects laborers traveling to GCC countries, including Saudi Arabia, the United Arab Emirates (UAE), Qatar, Oman, Kuwait, and Bahrain. These countries host a significant number of Pakistani laborers who contribute substantially to Pakistan’s economy through remittances.
By imposing this duty, the government aims to generate additional revenue, which could potentially be used for public welfare programs and economic development initiatives. However, the decision may also place an additional financial burden on laborers who often travel on tight budgets.
Background and Rationale
The introduction of this excise duty comes at a time when the government is exploring various avenues to enhance its revenue stream. The labor visa holders traveling to GCC countries represent a substantial number, providing a significant opportunity for revenue collection through this duty.
Saudi Arabia, the UAE, and other GCC countries are prime destinations for Pakistani laborers due to the high demand for workforce in various sectors, including construction, healthcare, and domestic services. The steady flow of labor to these countries makes them a strategic target for such fiscal policies.
Reaction and Potential Consequences
The response to this new duty is likely to be mixed. While it will undoubtedly increase the cost of travel for laborers, the government’s perspective focuses on the larger economic benefits. Critics may argue that this move could deter potential laborers from seeking employment opportunities abroad, potentially affecting remittance flows.
On the other hand, supporters might see it as a necessary step towards fiscal discipline and improving the country’s financial health. The government’s ability to balance these perspectives will be crucial in the coming months.
Key Points of the Notification
- Federal Excise Duty: Fixed at Rs. 5,000 per air ticket.
- Applicable Passengers: Those holding labor visas for GCC countries.
- Verification: Labor visas must be printed on passports and verified by the Protector of Emigrants.
- GCC Countries: Includes Saudi Arabia, UAE, Qatar, Oman, Kuwait, and Bahrain.
The FBR’s decision to impose a fixed excise duty on laborers traveling to GCC countries represents a strategic effort to enhance revenue collection. While this move might bring in significant funds for the government, it is essential to monitor its impact on the labor force and remittance inflows. Balancing fiscal objectives with the welfare of laborers will be crucial in ensuring the success and sustainability of this policy.
