08 MAY 2014 – KATHMANDU – Hotel owners in Kathmandu expressed their serious concerns over the campaign of Kathmandu Metropolitan City (KMC) taxation policy against tax defaulters, deeming the move ‘illegal’ since the government laws exempt them from property taxes. KMC has recently stopped garbage collection in hotels in order to force them clear house and land tax.
Organising a press meet on Tuesday, Hotel Association Nepal (HAN) said there is no legal provision to collect the tax from hotels as per the House and Land Tax Act 1962. “We do not need to pay this particular tax,” said HAN president BK Shrestha.
The 1962 Act has exempted tax on ‘the land where the main machine of a mill is installed, godowns, labour quarters and sheds along with specific houses and lands where customers of a hotel dine and stay as well as motor vehicles parking space and gardens.’
KMC officials, however, stated the law exempts only certain components of the hotel. “The act has clearly stated that the property tax wouldn’t be imposed on swimming pool, parking, rooms and garden,” said Mahesh Kafle, Chief of Revenue Department at the KMC.
Kafle claimed the Local Self Governance Act entitles the metropolis to disrupt basic services in order to recover taxes from the defaulters. The act enables KMC to collect taxes relating to house and land, business, rent, advertisement and entertainment along with the authority to freeze and auction off the properties of defaulting parties.
Seven days ago, KMC had cut off basic services to 31 entities which includes most of the five star hotels in Kathmandu. According to the metropolis, tax remains to be recovered from Bouddha-based Hyatt Regency, Radisson hotel and Shangri-la hotel at Lazimpat, Everest hotel at New Baneshwor, Yak and Yeti at Durbarmarg and Soaltee hotel at Tahachal among others. Most of these hotels have reportedly not submitted the details of its property to the KMC.
Hotels are entitled to take sum 10% of Service tax and another 10 and above percent as tourism tax even some of the hotels are running for local business only as well. Many hotels does not pay regular income tax or there are many occassion hotels been locked due to non payment to the staff, tax and rents to the owners as well.
Land and property tax is not the tax that can be covered by lenders or customers, it should be paid by the owner of the property and in our opinion, land owners must pay the appropriate tax that Metropolis has described and scheduled. Because of hotels non payment, we the public residing beside of hotels should not suffer by seeing garbage and other public services. Please settle you tax as soon as possible.