Chinese carriers refuse to pay VAT to Nepal - report

Chinese carriers are reportedly refusing to pay Nepal's value-added tax (VAT), according to Kathmandu-based magazine Epardafas. Four airlines have accrued a combined debt of NPR4b rupees (US$29.5m) and the Chinese Embassy in the city is allegedly lobbying the Nepalese government to waive the debt, saying the imposition of VAT on foreign carriers violates international norms. Nepal began imposing VAT on international air services after it changed its Finance Act in the second quarter of 2023. To date, most foreign operators have complied and are paying the tax, but the four Chinese carriers that fly into the country - Air China, China Eastern Airlines, China Southern Airlines, and Sichuan Airlines - have not. A finance ministry official told Epardafas that all foreign airlines operating in Nepal must comply with the nation’s tax laws. He added that Nepalese entities abide by local tax laws when operating abroad and reciprocity is expected. Despite this, the Chinese carriers are said to be lobbying against the paying the VAT through diplomatic channels.<br/>