Pradhan & Associates
37-9 Gaurav Marg
Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
The Value Added Tax Act 1996 (“VAT Act”) supplants various previous laws such as sales tax, hotel tax, contract tax and entertainment tax. VAT Act exempts the import and export of aircraft and its engine and gear box from VAT.
According to the Income Tax Act 2002:
Lease: Tax at the rate of 10% is applicable on the payment made against the lease of an aircraft.
Maintenance: Tax at the rate of 5% is applicable on the payment made by a resident to a non-resident against the maintenance or other contracts pertaining to aircraft.
Interest: Tax at the rate of 15% is applicable on the payment of interest payment to the lender. There are no taxes upon the repayment of the principle
Charges on Use
Passenger Service Charges: Passenger Service Charges for international flights range from Nepalese Rupees (“NPR”) 700 to NPR 1,000 (approximately US$ 8 to US$10) depending upon the airport of departure and the country of destination. Passenger Service Charges for domestic flights range from NPR 50 to NPR 150 (approximately US$ 0.6 to US$ 1.8) depending upon the airport of departure.
Cargo Charges: Cargo charges are applicable at the following rates –
|Cargo Type||Cargo Charges|
|a) imported from abroad||NPR 0.50 (approx. US$ 0.005) per kg|
|b) transport by domestic flight||NPR 0.30 (approx. US$ 0.003) per kg|
Landing fees: Landing fees on international flights begin at the rate of US$ 1.25 per 1,000 kg and increase with respect to the weight of the aircraft. Landing fees for domestic flights begin at the rate of NPR 20 (approximately US$ 0.2) per 1,000 kg and increase with respect to the weight of the aircraft.
Parking fees: Parking fees for international flights begin at the rate of US$ 1 per 1,000 kg and increase with respect to the weight of the aircraft. Parking fees for domestic flights begin at the rate of NPR 37.5 (approximately US$ 0.4) per 1,000 kg and increase with respect to the weight of the aircraft.
Mortgage Tax – No
Promissory Note Tax – The applicable stamp duties on documents whose face value is above NPR 1,000 (approximately US$ 12) is NPR 4 (approximately US$ 0.05) per thousand in excess of NPR 1,000.
According to the rates prescribed for the financial year 2012-2013, there shall be 1% customs duties upon the import of aircraft (by sale or by lease) and its components including gear boxes, engines, tires, batteries, nuts, bolts and rivets. However, if the aircraft or its engines are returned within three years from the date of their import, the customs duties shall be refunded.
The charges on registration are not imposed as taxes but fees payable to the Civil Aviation Authority of Nepal at the following rates:
|Aircraft||Registration Fee (US$)|
|(a) Aircraft having flight weight up to first 5,700 kg||300|
|(b) per additional 10,000 kg exceeding the above||125|
|(c) Glider, Hang Glider, Balloon, Micro-light and Sail Plane||100|
Taxes on luxurious items are normally reflected upon the customs duties imposed on such goods. There are no separate luxury taxes as such.
FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.
DISCLAIMER: The above information should not be relied upon by the reader for legal advice as it is intended merely to serve as preliminary guide to the laws and regulations governing the taxation of aviation and aircraft in the Nepal. The information intends to provide summary-level information about certain tax issues affecting general aviation and aircraft finance. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aviation and aircraft.