Nepal | March 28, 2020

Threat to halt air services from Thursday

Himalayan News Service

Kathmandu, June 3

Airlines Operators Association of Nepal has announced that it will be halting all kinds of air services from June 6 due to lack of spare parts.

As the new Finance Act has increased customs tax on spare parts of aeroplanes, private airline companies have not imported any spare part since May 31.

Issuing a press statement today, AOAN demanded that the government revoke its earlier decision, failing which they would halt all services from Thursday.

Finance Minister Yubaraj Khatiwada had presented the Finance Act on Wednesday, along with the budget. The act has fixed 30 per cent customs tax on spare parts of aircraft. Subsequently, the new rule of customs tax was implemented on Thursday.

“The new act has imposed customs tax of a whopping 30 per cent on import of spare parts of aircraft against just one per cent earlier,” Pavitra Kumar Karki, president of AAON, told THT.

According to Karki, airline companies have stock of enough spare parts for three more days. After that, they will have to bring spare parts by paying 30 per cent customs tax, which the association has refused to do.

“It is simply not possible to pay 30 per cent tax on spare parts. Air service is a very sensitive sector and the government should revert to the old taxation system for airline companies,” he added.

As per the new Finance Act, one per cent customs tax will be imposed on propellers, rotor blades, wheel brakes, steering, landing gears, window-sills and engines.

All the other spare parts will invite 30 per cent customs tax, as per the act.

“Since spare parts of aircraft need to be changed frequently and all the spare parts have to be imported, it is just not possible for us to pay 30 per cent customs tax,” Karki said.

Meanwhile, AOAN claimed that it had sought support from the authorities concerned regarding customs duty, but they had yet to respond. “We have requested the Ministry of Culture, Tourism and Civil Aviation, Ministry of Finance, Office of the Auditor General, Department of Customs and Civil Aviation Authority of Nepal to take relevant action. They have only assured us verbally of considering our request.

Due to lack of spare parts, all air services will have to be halted in a few days,” adds the statement.

A version of this article appears in print on June 04, 2019 of The Himalayan Times.

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