TIA should be made tax-free zone: AirlinesDomestic airlines have urged the government to declare 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.
Domestic airlines have urged the government to declare 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.
Likewise, the AOAN has asked the government to provide a special discount on income tax for new national and international airlines.
The association said in its draft wish list that the government should provide 100 percent income tax exemption for at least five years and 50 percent exemption for three years for new airlines.
It has also urged the government to establish refueling facilities at other airports, review airfares every two years, establish a separate air safety mechanism, provide special subsidies to encourage airlines to operate in remote sectors and give the airline industry recognition as a national priority industry.
“The existing policy has incorporated all the issues to address the country’s aviation industry, but it has never been implemented,” said Caan Director General Sanjiv Gautam.
“So the question is not about Nepal’s weak aviation policy but its implementation. However, as per the need of the time and changing global aviation and technology, it should be given a periodic review,” he added.
Pokhrel says air transport essential in Karnali
KATHMANDU: Tourism Minister Ananda Prasad Pokhrel said on Friday that he was distressed about his own decision to exhibit an authoritarian streak by banning passenger flights by single-engine aircraft.
Last March, a minister-level meeting slapped a ban on the registration of new single-engine aircraft following the crash landing of an Air Kasthamandap P-750 XSTOL on February 26 in which its two pilots were killed.
The government also said that single-engine planes would not be allowed to carry passengers. Subsequently, in May, the Supreme Court stayed the government’s decision. “When I visited some areas in remote Karnali, I realized that remote people need air transport regardless of whether it is provided by a single-engine or twin-engine aircraft,” he said at an interaction here on Friday. “In fact, the people’s purchasing power has increased and they can afford to fly. Hence, the aviation industry in Nepal has the potential to grow tremendously.”