After implementing the federal excise duty on air tickets via the Finance Supplemental Bill 2023, the government is now planning to impose a new withholding tax on frequent international travelers in the upcoming budget 2023-24. As per the details, the tax has been proposed for all categories of international travelers.
Withholding Tax on Frequent International Travelers
As per sources privy to the matter, the proposal to implement withholding tax will also bring many people under the tax net as the difference between the taxes charged on filers and Non-filers of income tax will be huge. Moreover, the government has also fixed the new rates of federal excise duty on air tickets of business, first class, and club class based on regions/areas in line with the three tiers of IATA. Experts believe that the move may discourage travelers and resultantly, the government will lose whatever revenue it was making before the taxes.
According to a local publication, the rates of the FED, under the first slab, would be Rs. 250,000 on the said tickets of IATA Traffic Conference Area-1 (North, Central, South America, and Environs). Whereas the rate of the FED, under the second slab, would be Rs. 75,000 on the said tickets of IATA Traffic Conference Area-2 (Middle East and Africa). The FED would be Rs. 150,000 for IATA Traffic Conference Area-2 (Europe). Under the third slab, the rate of the FED would be Rs. 150,000 on the said tickets of IATA Traffic Conference Area-3 (Far East, Australia, New Zealand, and Pacific Islands).
Former chairman and executive board member of the Travel Agents Association of Pakistan (TAAP) Nadeem Sharif lamented that, “This imposition of duty on air fare will result in a reduction in business class travel to Pakistan. Only those multinational companies that consider it compulsory for their Chief Executive Officers and other higher management to travel in business class will keep travelling.”