In a move that will further strain the finances of blue-collar workers, Pakistan has introduced a fixed federal excise duty of Rs5,000 (Dh66) on airfares for laborers traveling to the UAE and other Gulf Cooperation Council (GCC) countries. This new tax will increase flight costs for workers already facing high airfares due to limited seat availability on the UAE-Pakistan route.
The Federal Board of Revenue of Pakistan announced this new duty in a notification last week, stating that they will add Rs 5,000 to the ticket price for passengers holding labor visas. These visas must be verified by the Protector of Emigrants (Bureau of Emigration and Overseas Employment) before embarking on international journeys from Pakistan to GCC countries.
Given that the UAE-Pakistan air corridor is one of the busiest due to the large South Asian expatriate community in the Emirates, this new tax is expected to hit blue-collar workers the hardest.
Already facing high airfares, workers will now need to pay an additional amount, which could significantly impact their limited earnings.
“This is an additional burden on workers like me. It may sound like a small amount in UAE dirhams, but Rs5,000 is a fairly decent amount for poor workers coming from remote areas of Pakistan in search of a better financial future. These blue-collar workers are also the largest source of remittances to Pakistan. The government must think twice when making such decisions,” said Ali Ahmed, a former laborer now working as an assistant at a private company in the UAE.
Currently, five Pakistani and four UAE carriers operate flights between the two countries. The decision to impose this fixed federal excise duty follows an increase in duty on Business Class air tickets by Rs30,000 to Rs105,000 for flights to the UAE, GCC, and other Middle Eastern countries, effective from July 1, 2024.
In recent years, Pakistan has seen a significant outflow of workers due to job shortages, high inflation, and political instability. The GCC region, including the UAE, Saudi Arabia, Oman, Bahrain, Qatar, and Kuwait, remains the top destination for Pakistani workers, with around 1.7 million South Asians residing and working in the UAE alone. In 2023-24, 230,000 Pakistanis migrated to the UAE, while Saudi Arabia received the highest number of workers, with 426,951 Pakistanis finding jobs there.
Data from the Pakistan Economic Survey 2023-24 shows that over 13.53 million Pakistanis have gone abroad to work, with 96% of them heading to GCC countries. These workers are a crucial part of Pakistan’s economy, as they send remittances back home, which is a primary source of foreign exchange for the country.
