Tourism entrepreneurs demand government remove VAT on air tickets

KATHMANDU: Tourism entrepreneurs have demanded the abolition of the value-added tax (VAT) on air tickets, claiming it has negatively impacted the tourism sector.

During a discussion organised by the Nepal Association of Tour and Travel Agents (NATTA) in Kathmandu on Thursday, stakeholders called for the removal of VAT, citing its role in raising ticket prices and discouraging foreign visitors to Nepal.

Manoj Karki, President of the Airlines Operators Association of Nepal, stated that the tax has forced passengers to pay inflated ticket prices, adversely affecting not just the aviation industry but the broader tourism sector. 

Thakur Raj Pandey, Senior Vice President of Nepal Mountaineering Association (NMA), underscored the need for tax reforms in the upcoming fiscal year’s budget, targeting tourism-related businesses, including aviation.

Former President of NATTA, Madhu Acharya, suggested that the government consider alternatives to VAT on airfares, referencing India’s lower tax rates—5% on domestic and 12% on business-class tickets. Acharya argued that high ticket costs have contributed to a drop in foreign tourist arrivals.

Similarly, Sangharsha Bista, President of Restaurant and Bar Association of Nepal (REBAN), criticised the tax for creating an unfavourable business environment and impacting the overall sector.

The VAT on air tickets was introduced through the budget for current fiscal year 2024/25.

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