Hotel Association of Nepal (HAN) has said that Kathmandu Metropolitan City’s latest diktat on tax is against the law.

Kathmandu Metropolis has recent sent letters to hotels, asking them to clear land and house tax at the earliest according to Local Governance Act, 1998.

But the hoteliers claim that they are exempted of the tax under ‘Land and Building Tax Act 1962’.

“The metropolis has also warned of stern action against hotels, if we do not pay taxes,” president of Hotel Association of Nepal (HAN) BK Shrestha said, at the press meet here today.

However, he claimed that such tax is illegal. “Clause 12 of the Land and Building Tax Act 1962 exempts the hotels from paying house and land tax,” he said, adding that the Clause 3 of the same Act also states that the Act will determine the land and house tax irrespective of whatsoever provision in others acts. “The Act has not been annulled yet and hotels are not required to pay such taxes.”

The metropolis, however, claims that the hotels are liable to pay the house and land tax under the Local Governance Act, 1998. The Kathmandu Metropolis has stopped collecting garbage from hotels since last one week after the hotels failed to pay house and land tax.

The metropolis also accepted that Land and Building Tax Act 2019 BS exempts the hotels from paying tax of place where hotel visitors stay, restaurants, parking space and garden area. “But the hotels have to pay taxes of house and land used for non-hotel purposes like office secretariat, lobby and the space rent out to other offices,” the metropolis officials claimed. “If they have used their space as per Clause 12, they should come and declare the condition.”

The metropolis has started asking the big hotels and commercial complexes within the Kathmandu Metropolitan City (KMC) to file house and land tax of their last 15 years. The metropolis officials estimate that five-star hotels owe an average of Rs 300,000 a year each as house and rent tax, though the hoteliers do not agree. But the metropolis officials warn that they could also freeze hotels bank accounts, if they do not play by the law.

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