Kathmandu’s Tribhuvan International Airport
Kathmandu’s Tribhuvan International Airport
Kathmandu’s Tribhuvan International Airport a tax-free zone to boost the flagging aviation industry when it amends Aviation Policy 2006. The Aviation Policy comes up for its second five-year review this year.
The government has been charging unnecessary import duty on aircraft spare parts and other components although the Aviation Policy talks about tax waivers, complained airline representatives while speaking at an interaction organized by the Tourism Ministry to include inputs from stakeholders in the planned amendment to the policy.
According to airlines, they have been paying hefty amounts in VAT on the import of spare parts. The government charges 1 percent tax on purchased or leased aircraft. Spare parts are charged VAT ranging from 13 to 40 percent.
In addition, the government charges 10 percent as aircraft lease tax. Likewise, carriers have to pay 15 percent of the total cost of sending aircraft crews for training abroad as Tax Deducted at Source (TDS).
The unnecessary tax burden has been affecting the growth of the airline industry in Nepal, they said. For example, Buddha Air has constructed a state-of-the-art closed door hangar facility to provide maintenance facilities for its aircraft as well as those from outside the country.
Recently, it signed an agreement with Dhaka-based Novoair to provide maintenance services for its ATR aircraft. “But after one maintenance service, the airline said that it would not be able to come again to Nepal due to the high tax imposed on aircraft maintenance,” said airline officials, adding that Novoair went to Singapore. “It also lost a proposed aircraft maintenance agreement with Bhutan-based Druk Air due to tax issues,” they said.
“None of the airports in Asia imposes customs duty on equipment used inside the airport,” said Manoj Karki, general secretary of the Airlines Operators Association of Nepal (AOAN). “But it happens in Nepal.” He said that the tax burden is transferred to the passengers that make flying expensive in Nepal. “The government should seriously consider these issues.”
Meanwhile, the AOAN has asked the government to clarify the dual monitoring system in the aviation industry involving the Tourism Ministry and the Civil Aviation Authority of Nepal (Caan). “It’s not rational for the ministry to play the role of a monitoring body,” said Karki.
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