HEADLINE NEWS THE RISING NEPAL (DAILY)

Of records
Fulbari, Radisson still default on Tourist Service Fee

BY NAVIN SINGH KHADKA

Kathmandu, May 17: Fulbari Resort and Hotel Radisson continue to be Tourism Service Fee (TSF) defaulters albeit they have of late started depositing the fee currently being collected from their clients and the back dues on installment basis.

Records with the Department of Taxation (DoT) show Fulbari Resort still owing the national coffer Rupees 2.2 million as TSF it collected from its clients till July last year ever since it began operation in the scenic town of Pokhara. While, Radisson has the fee-payables backlog of Rupees 1.3 million. The department has given clean chit to other upper category tourist hotels in the TSF case, so far.

According to Bishnu Prasad Nepal, Chief Tax Officer at Pokhara VAT Office, the 165-room biggest resort in the country, Fulbari has of late been depositing the currently collected TSF and the dues of last year on monthly installment basis. "But the bulk amount (Rupees 2.2 million) still remains unpaid." The Pokhara VAT office this year has already collected more than seven million as TSF from different hotels and travel agents in Gandaki and Dhaulagiri Zones.

Of its four million due till July last year, Radisson is still to pay Rupees 1.3 million TSF. Officials at Kathmandu VAT Office said the 163-roomed five star hotel has started paying the fee on current-month basis and the back dues as partial payments. "It has already paid three installments and says that the remaining amount would be paid very soon."

Officials at Fulbari could not be contacted despite repeated efforts. G.S Rastaugi, Financial Controller of Radisson said that the hotel realises the case but has not been able to deposit the money due to circles of crisis. "But, we plan to settle it down by mid-July."

The Rising Nepal in its March 2 issue this year had exposed that the two upper category hotels were TSF defaulters.

Existing legal provisions require tourist-standard hotels and travel agencies registered with Value Added Tax (VAT) office to charge two per cent TSF on their every client’s bill. The money thus collected, along with VAT every month, has to be deposited at DoT. The Department, in turn, hands over the TSF to Nepal Tourism Board – an autonomous body presently focussing on destination promotion -- that uses the money to run itself.

Both VAT and TSF are the money tourism entrepreneurs are supposed to collect from tourists and deposit at the Department. In other words, the travel-operators are only mediums to reach both the public and tourist’s money to the national coffer.

Based on that theory, hotels, like any other business entity, have been regularly depositing the VAT. But, in TSF’s case, how could Fulbari and Radisson become exceptions? It all has to do with the existing rules and regulations, DoT officials say.

The Financial Act does require tourism entrepreneurs, included in VAT, to collect and deposit the two per cent TSF. But, it is silent on what if they choose not to or, say, pay belatedly. No penalty, no punishment. "This is the prime reason why there have been cases of default," said Lal Mani Joshi, Deputy Director at the DoT.

This is not the case with VAT defaulters, though. If a businessman does not pay the VAT within the deadline (the 25th day of every month), he/she has to pay 11.5 per cent of the due amount as penalty for the first delayed payment. For the second month, the VAT office penalises the defaulters with 23 per cent on the due tax. The later the payment, the higher the penalty.

But with no such tightening screws against TSF defaulters, the authorities say they are helpless. "Right now, the only weapon we have against TSF defaulters is the media," said an official at the Kathmandu VAT office. "The fear of being reported by media is what has made many tourism operators to deposit the TSF."

He, however, said his office was also considering of locking up such defaulting organisations. "We would start locking up their accounts section first."

Interestingly, Finance Ministry officials said they had no idea about the issue. One Joint Secretary at the ministry, however, said his office would study the matter and plug the leakage. "If need be, this would be addressed by the up-coming budget speech."

At a time when the government has been harping on strictly checking tax evaders, just how serious is the TSF-default case? "It is much more serious crime than tax evasion," said Dr. Rup Khadka, a noted VAT expert. "Taxes like income tax are something to do with your hard earned money. But, TSF is something that businessmen are only mediators to collect the money from their clients and deposit at the national coffer."

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