KATHMANDU: Tourism entrepreneurs in Nepal are expressing concern as Chinese airlines issue warnings of potential flight suspensions if the value-added tax (VAT) provision on air tickets is not removed. These entrepreneurs, aiming to leverage the influx of Chinese tourists to revitalize Nepal's struggling tourism industry, fear that such a move could deal a significant blow to the sector.

Pom Narayan Shrestha, chairman of the Pokhara Tourism Council (PTCC), highlighted China's dissatisfaction with the VAT implementation on air tickets, stating that the threat of flight suspensions has added to the industry's worries. The potential halt in flights from Chinese destinations could profoundly impact Nepal's tourism, which has been gradually welcoming more Chinese visitors.

Despite recent promotional efforts in various Chinese cities to attract tourists, the imposition of VAT on air tickets has dampened optimism among tourism businessmen. Shrestha emphasized the need for immediate government action to address the situation and mitigate potential adverse effects on tourism.

Statistics from the Nepal Tourism Board reflect a gradual increase in Chinese tourist arrivals, with 46,671 recorded in the first five months of 2024. However, concerns loom over the impact of VAT on airfares, with industry stakeholders noting that the additional tax has made air travel to Nepal less appealing, leading to diverted traffic and decreased arrivals.

The issue has prompted discussions between Nepalese authorities and stakeholders, including representatives from the Ministry of Finance, Inland Revenue Department (IRD), and Civil Aviation Authority of Nepal (CAAN). While efforts are underway to find a resolution, tensions persist as Chinese airlines push for the removal of the VAT provision, citing conflicts with existing agreements and regulations.