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  • Monday, 10 May 2021

Hotel Association demand for special relief package

Published Date : April 27, 2021

KATHMANDU: The Hotel Association of Nepal (HAN), an umbrella organization of Nepali tourism enterpreneurs, has suggested for special economic package, tax exemption and electricity tariff exemption in the forthcoming national budget.

Suggesting to the government institutionally on Tuesday, HAN demanded that the impact of COVID-19 on the hotel sector should be given tax exemption for two years.

Similarly, HAN has demanded the government to give maximum 50/50 percent exemption in value added tax and income tax. So far, the government has been giving a maximum of 20 percent tax exemption to the COVID-affected tourism sector.

However, HAN has demanded that the direct taxes currently being levied by the federal or local government and the metropolis or municipality or village in the hotel sector should be waived for the next three years. It has also demanded the government to waive all the delay charges (damages) incurred on the entire revenue including loans and taxes during the affected period.

HAN suggested the government, which is currently in the process of preparing the budget, to re-implement the system of refund of value added tax on gas and diesel, which was removed last fiscal year.

HAN suggestions:

– Special refinance (3% interest rate) provided to the most affected areas such as hotels announced in the last fiscal year should be made effective and continued for the next two years and the limit of special refinancing should be increased from 50 million to 100 million.

Also, priority will be given to facilitate interest and loan repayment. There should be deduction of penalty and damages on the interest of the loan taken under various headings. The concessions and facilities provided by the Monetary Policy 2077/78 BS published by Nepal Rastra Bank should be continued for the coming year as well.

– Debt limit should be increased from Rs. 200 million depending on the size of hotel investment.

– There should be separate employment protection fund and tourism development (hotel) fund for the severely affected hotel industry.

– In order to keep the hotels alive, hotel operating expenses should be easily available at 5 percent interest. This provision should also be applicable to the borrowers consuming other concessional loans.

– Special arrangements should be made for the suspension of interest for up to 2 years for the tourism and hotel industry which has been declared as the most affected area by COVID-19. Also, it should be capitalized without interest.

– As monetary incentives being given to other industries through exports, monetary incentives should be available to the hotel industry for earning foreign currency.

– Demand charge exemption provided by the Government of Nepal to the hotel industry should be implemented immediately as it could not be implemented.

– For the hotel sector, there should be provision of 50% discount in electricity tariff for the next 2 years and 100% discount in demand fee for at least 2 years until the situation becomes comfortable.

– As the hotel business is not yet running smoothly and there is no other source of income, the government has to contribute 31 percent (20 percent of the company and 11 percent of the employees) of their basic salary to the Social Security Fund for one year. In case of lockdown, arrangements should be made to use up to 50% of the amount deposited so far without any interest charge on the basis of need. Also, considering the current situation, the time limit for listing in the social security fund should be fixed at 3 years.

– There should be an arrangement to easily forward the amount deposited in the Employees’ Provident Fund to the contributors who have been deposited in the Social Security Fund and deposited regularly.

– According to the collective agreement between the Hotel Association of Nepal and the trade unions active in the hotel industry, the social security fund has been deposited on the basis of the minimum wage set by the state in the past but now the situation is getting more complicated. Arrangements should be made so that the contributors are not deprived of the prescribed facilities.

– As the hotel business has been affected and the livelihood of the employees has been adversely affected, there should be an arrangement for the employees to withdraw the amount deposited by their employees from their citizen investment fund till mid-July 2021 as a loan without any interest and repay the amount.

– Government structures leased to hotels / resorts operating in the case of the closure of the structure should be completely rented. Also, the rent amount should be maintained at concessional rate after coming into operation.

– As most of the small and medium hotels are rented, there is a lack of collateral, so the loan should be available at the lowest interest rate based on the audit report of the hotel.

– Considering the current situation, the environmental study to be done by the hotels could not be done on time due to lack of funds.

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