The Nepal Weekly 
March 5, 2024Out of 49 national and international airlines flying from Nepal, 26 have not paid Value Added Tax (VAT) to the government. From the current financial year, the government has made mandatory payment of VAT on flights. According to this, even though the airline companies have collected the amount from the passengers by adding VAT to the ticket, they have not submitted it to the government.
According to the Inland Revenue Department, 22 airlines have paid VAT till Nov/Dec. Similarly, Buddha Air, which operates the most domestic flights, has matched the VAT paid on the purchase of aircraft by availing the facilities provided by the Economic Act.
In the current financial year, the government has mentioned that VAT must be paid when flying by making arrangements in the financial act. According to the department, as the value added tax is levied on air transport services based on the Financial Act, 2080, the tax must be registered and collected within 30 days from the date the tax is levied or the taxable transaction exceeds the limit of 20 lakh rupees. However, it can be seen from the data received from the department that more than 54 percent of the airline companies that have adjusted the air fares have not paid VAT. In which there are 6 companies for domestic flights and 20 companies for international flights.
Air Dynasty Heli Services, which carried seven thousand passengers in 2023 for domestic flights, did not pay VAT. Likewise, Simric Air, which carried 4,572 domestic passengers in the same year, also did not pay VAT. Similarly, Sri Helicopters, Fistel Air, Manang Air and Mustang Helicopters have also not paid VAT yet, according to the department’s data.
Airlines for not paying VAT for international flights include Air Arabia, Air Arabia Abu Dhabi, Air India, SriLankan Airlines, Biman Bangladesh, Bhutan Airlines, Air China, China Eastern, Cathay Pacific Airways, Sichuan Airlines, China Southern, Fly, Jazeera Airways, Kuwait Air, Dubai, Korean Air, Malindo Air, Tibet Airlines, Thai Smile Airways, Thai Lion Air and Vistara Air. These 20 international airlines flew 1 million 28 thousand 658 passengers from Nepal in 2023 according to the data of Tribhuvan International Airport Office.
