FNCCI and Tourism Minister Convene to Discuss Sector Challenges in Upcoming Budget

Tourism and Air Transport Committee's FNCCI, led by Vice President Hemraj Dhakal and Chairman Desh Bandhu Basnet, has approached Minister Hit Bahadur Tamang with key concerns impacting Nepal’s tourism sector. They advocate for recognizing tourism as a national priority industry to provide it with comparable benefits to the manufacturing sector.

Issues highlighted include restrictive clauses in the Foreign Investment and Technology Transfer Act 2075 that deter foreign investment and recent tax increases—13% VAT on air tickets and a 2% luxury tax on premium accommodations—which are seen as detrimental, potentially leading to the decline of Nepal’s tourism competitiveness.

The Federation has proposed several specific measures to the Ministry of Culture, Tourism, and Civil Aviation to revitalize and support the tourism industry:

1. National Priority Classification: They request that the hotel sector, crucial for economic and destination development, be categorized under national priority industries for enhanced support.

2. Manufacturing-like Facilities: The tourism sector should receive similar benefits to manufacturing, including special electricity tariffs and tax concessions to support sustainable tourism development.

3. Amendment of Investment Act: Suggest amendments to the Foreign Investment and Technology Transfer Act to make Nepal more attractive to international hotel brands by easing restrictions on royalty fees.

4. Reduction of Tax Burdens: Advocating for the removal of the additional 13% tax on air tickets to keep travel costs competitive.

5. Repeal of Luxury Tax: Proposing the elimination of the new luxury tax on high-end hotels and resorts to maintain market attractiveness.

6. Airport Improvements: Emphasizing the need for full operationalization of Pokhara International Airport and Gautam Buddha International Airport to improve accessibility and attract more tourists, particularly from India.

These initiatives aim to bolster Nepal's tourism sector by making it more competitive and investment-friendly.