IATA Demands Pakistan to Lower Tax Rate on Airline Tickets

The International Air Transport Association (IATA) has called on Pakistan to reduce the new tax on airline tickets. The federal government raised the prices of economy, economy plus, business and club class air tickets up to 150 percent by imposing a higher excise duty on air travel through the federal budget 2024-25. In a letter to the Ministry of Finance, IATA demanded to reverse this tax increase, arguing that it was imposed without consulting stakeholders, which contravenes international civil aviation regulations. The association said the tax hike negatively impacts the business of airlines and travel agents. The federal government last month hiked the excise duty on business and club class air tickets up to Rs. 350,000 in budget FY25. Economy and economy plus air tickets issued on or after the 1st day of July 2024 will pay Rs. 12,500 duty on tickets. Individuals traveling to the Middle East and African countries, including destinations like Dubai and Saudi Arabia, have to pay Rs. 105,000 duty on their business/club class air tickets, up Rs. 30,000 compared to the outgoing fiscal year. A fee of Rs. 100,000 per business/club class ticket is now applicable for going to the United States and Canada. For individuals going to North America, Latin America, and Canada, duty has been increased from Rs. 250,000 to Rs. 350,000 per business/club class ticket. The duty on business and club class tickets to European destinations has been increased by Rs. 60,000 to Rs. 210,000, while duty on the same category of tickets for traveling to New Zealand and Australia has also been increased to Rs. 210,000. For travel to China, Malaysia, and Indonesia, the excise duty on business and club class tickets has been increased to Rs. 210,000.