Owais Crawford
Pakistan has implemented several taxes on air travel, including airport taxes and Federal Excise Duties (FED). In 2019, the Civil Aviation Authority (CAA) announced that international departing passengers would be required to pay Rs. 2,800 in Pakistani currency as part of their airport charges, replacing the previous charge of $20. Additionally, the Pakistani government has levied FED on airline tickets for first class, business class, and club class passengers, with a rate of 20% of the ticket price or Rs. 50,000, whichever is higher. These taxes aim to increase tax revenue for the government and impact passengers travelling from different destinations within Pakistan.
| Characteristics | Values |
|---|---|
| Name of tax | Airport tax, also referred to as the 'RG tax' or 'Departure Country Tax' |
| Who it applies to | Passengers travelling in business class, first class, and club class |
| Amount | Rs. 2,800 or the equivalent of $20 |
| Currency | Pakistani Rupee (previously in US dollars) |
| Date introduced | June 2019 |
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What You'll Learn
The Pakistani airport tax is also known as the 'RG tax' or ''exit tax'
Pakistan has implemented a new round of Federal Excise Duty (FED) on airline tickets, which includes an airport tax. This tax is also known as the RG Tax or Exit Tax and must be paid by passengers travelling in business class, first class, and club class. The Pakistani airport tax is levied by the government as part of the Finance (Supplementary) Bill 2023, aiming to increase tax revenue.
The rate of the RG Tax or Exit Tax depends on the passenger's destination. The International Air Transport Association's (IATA) Traffic Conference Areas are used to determine the applicable duty for each location. This tax has been a source of controversy, with some passengers expressing frustration over unexpected additional charges when changing their flights.
Previously, international passengers were required to pay $20 as airport charges. However, the Civil Aviation Authority (CAA) decided that airport charges would be collected in Pakistani rupees instead of US dollars. As a result, departing international passengers now pay a fixed amount of PKR 2,800 per person in airport charges.
The Pakistani airport tax, or RG Tax, is typically paid at the airport before departure. It is important for travellers to be aware of this additional cost when planning their trips to and from Pakistan. The tax amount is separate from the airline ticket cost and must be paid to the relevant airport or government authority.
Overall, the Pakistani airport tax, also known as the RG tax or exit tax, is a government-imposed levy on airline passengers departing from Pakistan. The tax amount varies depending on the passenger's destination and class of travel, and it is paid in Pakistani rupees. This tax contributes to the country's tax revenue and is applicable to all departing international passengers.
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The rate is Rs. 2,800 per international departure
In Pakistan, the Civil Aviation Authority (CAA) has stated that air passengers must pay Rs. 2,800 in Pakistani currency as part of the airport charges for international departures. This is a fixed amount per departing international passenger, as outlined in a CAA notification. Previously, international passengers were required to pay $20 as airport charges, but now the payment will be accepted in Pakistani rupees instead of US dollars at airports across the country.
The rate of Rs. 2,800 per international departure is a significant change from the previous charge of $20. This new rate is intended to simplify the payment process for passengers and ensure that all airline operators comply with the new regulations. By charging a fixed amount in Pakistani rupees, passengers will no longer need to worry about currency conversions or unexpected additional costs when departing from Pakistan on international flights.
This change is part of Pakistan's efforts to streamline its tax system and enhance tax collection. In February 2023, the Government of Pakistan introduced new duties and taxes on airline tickets, specifically targeting passengers purchasing club class, business class, and first-class tickets. These duties vary depending on the destination and are expected to raise significant tax revenue for the government.
It is important for travellers departing from Pakistan to be aware of the applicable airport taxes and duties. While the Rs. 2,800 airport charge is standardized for international departures, there may be additional taxes and duties imposed based on the class of travel and other factors. Passengers are advised to stay updated on the latest tax regulations and plan their travel budgets accordingly.
Overall, the implementation of a fixed airport tax rate of Rs. 2,800 per international departure in Pakistan is a step towards simplifying the tax structure for outbound travellers. By charging a consistent amount in the local currency, the Pakistani government aims to make the payment process more convenient for passengers while also bolstering its tax collection efforts. Travellers should stay informed about any updates to ensure a smooth departure experience.
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The tax is part of the Federal Excise Duty (FED)
The Pakistani government has imposed a new Federal Excise Duty (FED) on airline tickets. The National Assembly approved the new duties on February 20, 2023, as part of the amended Finance (Supplementary) Bill, which was moved by the Minister of Finance, Mohammad Ishaq Dar. The FED is a federally administered duty levied on goods and services in Pakistan at varying rates. The imposition of FED on airline tickets is intended to enhance the government's tax collection efforts and help raise Rs 170 billion in additional revenue.
The new duties apply specifically to passengers purchasing club class, business class, and first-class tickets. The rate of duty levied on these passengers will depend on their destination. The government has delineated four different duty amounts based on the International Air Transport Association's (IATA) Traffic Conference Areas. For example, passengers travelling in business class, first class, or club class must pay a tax equivalent to 20% of the ticket price or Rs. 50,000, whichever is higher.
It is important to note that the scope of the tax on services related to the FED is limited to the Islamabad Capital Territory. According to the constitution, sales tax on services, which replaces the FED, must be imposed and collected by the provinces or Islamabad on services provided within their respective territories.
The introduction of the FED on airline tickets has stirred some controversy. In one instance, a passenger travelling from Karachi to Doha (via Islamabad) was forced to pay an additional tax amount at the airport, which was not communicated to them beforehand. Such incidents have brought up questions about the implementation and communication of the new tax measures.
While the FED is a recent development, airport taxes in Pakistan are not a new concept. Previously, international passengers were required to pay airport charges in US dollars. However, in 2019, the Civil Aviation Authority (CAA) decided to collect these charges in Pakistani rupees, setting a fixed amount of Rs. 2,800 per departing international passenger. This change was made to simplify the payment process and avoid inconveniencing passengers with varying dollar exchange rates.
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The FED rate depends on seating class and destination
In Pakistan, the Federal Excise Duty (FED) is a federally administered duty levied on goods and services at varying rates. The FED rate for airline tickets depends on the seating class and destination.
The FED for airline tickets was introduced as part of the Finance (Supplementary) Bill 2023, which was approved by the Cabinet on February 15, 2023, and subsequently by the National Assembly on February 20. The Bill states that a tax equivalent to 20% of the ticket's fare or PKR 50,000, whichever is higher, will be levied on passengers travelling in business class, first class, and club class. However, it's worth noting that this measure stirred controversy and was discussed at the Senate Standing Committee on Finance and Revenue on February 16.
The Government of Pakistan has currently outlined four different FED amounts that passengers will have to pay, depending on their destination. These destinations are delineated using the International Air Transport Association's (IATA) Traffic Conference Areas. This move is intended to enhance the government's tax collection efforts and help raise PKR 170 billion in additional revenue.
It's important to note that the scope of the FED on services is limited to the Islamabad Capital Territory. As per the constitution, sales tax on services replaces the FED and must be imposed and collected by the provinces or Islamabad on services provided within their respective territories.
Additionally, it's worth mentioning that airport charges on international departures are also applicable. The Civil Aviation Authority (CAA) has stated that these charges will be collected in Pakistani rupees instead of US dollars, with a fixed amount of PKR 2,800 per departing international passenger.
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The tax is paid in Pakistani rupees, not US dollars
In Pakistan, the Civil Aviation Authority (CAA) has stated that airport charges must be paid in Pakistani rupees. This is a relatively recent development, as previously, international passengers were required to pay $20 USD as airport charges. Now, the amount has been fixed at Rs. 2,800 per departing international passenger. This change was implemented to avoid causing any inconvenience to passengers due to fluctuations in exchange rates. All airline operators are required to ensure compliance with this new regulation.
It is important to note that this airport tax is just one of the various taxes and duties that may be levied on air travellers in Pakistan. For example, in 2023, the Pakistani government introduced a new round of Federal Excise Duty (FED) on airline tickets for club class, business class, and first-class tickets. The rate of duty depends on the passenger's destination, and it is part of an effort to enhance tax collection and raise tax revenue for the government.
The FED on airline tickets was initially part of the Finance (Supplementary) Bill 2023, which was approved by the Cabinet in February of that year. According to the bill, a tax equivalent to 20% of the ticket's fare or Rs. 50,000, whichever was higher, would be levied on passengers travelling in the aforementioned premium classes. This particular measure stirred some controversy and was discussed at the Senate Standing Committee on Finance and Revenue meeting shortly after its announcement.
It is always recommended to stay updated with the latest regulations and duties applicable to your specific situation when travelling internationally. While the airport tax in Pakistan is now paid in Pakistani rupees, other taxes and duties related to air travel may vary, and it is the responsibility of the traveller to be aware of and prepared for any additional costs that may arise during their journey.
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Frequently asked questions
Airport tax, or Federal Excise Duty (FED), is a tax levied on certain air travel services in Pakistan.
The tax applies to passengers travelling in business class, first class, and club class.
The rate of the tax depends on the destination. There are currently four different duty amounts that passengers will have to pay for different destinations. The duty amounts range from Rs. 75,000 to Rs. 250,000.
The tax was approved by the National Assembly on February 20, 2023, as part of the amended Finance (Supplementary) Bill 2023.
It is not clear who will collect the tax. It could be charged by airlines and travel agents when issuing tickets, or it could be collected at the airport.
