KATHMANDU: The government has given continuity to the luxury tax on hotels and the value-added tax (VAT) on airfare in the budget for the upcoming fiscal year. Currently, the government imposes a 2 percent luxury tax on hotels and a 13 percent VAT on air tickets. On Tuesday, the government announced the budget for the next fiscal year, drawing criticism from business leaders who raised concerns about the continuation of these taxes.

The Hotel Association Nepal (HAN) expressed its views on the budget for the upcoming fiscal year, highlighting concerns over the ongoing luxury tax and VAT. According to a statement issued by HAN, the tax and VAT will make Nepal a more expensive destination, potentially reducing arrival of tourists.

“We requested a revision of this policy for the current year, and the government assured us that the tax would be removed in the budget for 2081/82. However, the continuation of these taxes has drawn HAN's attention,” reads the statement.

HAN Secretary General Sajan Shakya remarked that Nepal is becoming an expensive destination for tourists due to the government's tax policy. He believes that the increase in VAT and taxes will discourage tourists from visiting Nepal.

The Nepal Association of Tour and Travel Agents (NATTA) also opposed the VAT on air tickets.

HAN also noted the absence of any mention of the tourism decade (2023-2032) in the budget. The budget does not address the tourism year to be celebrated in 2025 or the operation of two international airports. Despite this, HAN acknowledged that the tourism sector has been identified as one of the five main transformative areas of development in next year's budget, recognizing its potential for rapid economic benefits.

HAN welcomed several provisions in the budget, including the preparation to promote major tourist destinations in all seven provinces, the provision of direct bus services from the border to main pilgrimage sites in Nepal, the development of the Buddha, Shiva, and Ramayana circuits for cross-border tourism with India and China, and the provision of a one-stop service for tourists at border areas.