Indian traders protest 'unfair' Nepal tax

Indian businessmen in Nepal protest against a tax imposed by the Nepal government from 2005, calling it unfair and misleading.
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Updated on Mar 25, 2007 09:49 AM IST
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IANS | By, Kathmandu

Indian businessmen in Nepal are protesting against a tax imposed by the Nepal government from 2005, calling it unfair and misleading.

Over 150 Indians signed a petition on Thursday, asking Nepal's finance ministry to revoke a tax that though intended for tourists, is being levied indiscriminately on Indians living in Nepal and running businesses in Kathmandu.

Indian businessman Manoj Singhal said the group will also petition Nepal's foreign ministry and culture, tourism and civil aviation ministry, telling them it was wrong to levy the tourism service fee meant for tourists on people residing in Nepal.

In January 2005, when King Gyanendra was finalising his plan to stage a coup and seize power with the help of the army, as a step to generate more funds for his ambitious plan, he persuaded the then government, appointed by him, to restructure the tourism service fee.

Earlier, tourists visiting Nepal had to pay the fee only when they took part in acknowledged tourist activities, like trekking, rafting, staying in hotels and dining at restaurants.

However, the financial ordinance issued on Jan 14, 2005 now makes it mandatory for all non-Nepalis flying out of Nepal's only international airport to pay the tax.

While making the revision, the state-run Nepal Tourism Board tried to justify it by saying it would facilitate tourists' stay in Nepal, ridding them of the trouble of having to pay the fee each time they availed of a tourism service.

However, in reality, the scheme was part of the drive by the royal government to raise funds for the Royal Nepalese Army to start a military operation against the Maoists and increase security operations like surveillance on politicians.

Around the same time, the government also increased value added tax to 13 percent. This means now any non-Nepali departing from Kathmandu's Tribhuvan International Airport has to pay a tourism service fee of NRS 565, irrespective of whether they are tourists or not.

Singhal says it is doubly unfair to impose this tax on Indian businessmen resident in Nepal since they are already paying the government additional tax 25 per cent of their earnings which establishes the fact they are not tourists.

The petition quotes the Oxford dictionary definition of a tourist. A tourist is a person who makes a short stay, is not a resident and is not allowed to take part in business activities.

"We are registered with the Nepal government," says Singhal. "How can we then be regarded as tourists?"

There are at least 20,000 Indian families resident in Kathmandu alone. Thousands of Indians live in the outer districts, working or running businesses.

Some of them have been living in Nepal for over three decades, and still have to pay the tourism service fee.

The Indian embassy in Kathmandu is reported to have taken up the matter several times with the Nepal government but to no avail.

Though the new seven-party government of prime minister Girija Prasad Koirala that came to power after the fall of King Gyanendra's regime scrapped many of the decisions taken by the royal cabinet, it has not revoked any of the decisions affecting India and Indians adversely.

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