The Inland Revenue Office (IRO) Pokhara has imposed an additional tax liability of Rs 25 million on paragliding companies operating in the region, following an investigation into widespread tax evasion. The probe was launched after the IRO received multiple complaints alleging discrepancies in financial reporting and invoicing practices within the sector.
Findings and Action Taken
According to Renu Timilsina Bhattarai, spokesperson for the Inland Revenue Office, many paragliding companies in Pokhara failed to issue proper invoices for a significant portion of their transactions during the previous fiscal year.
“Following complaints of tax evasion, we conducted an investigation and found that most companies owed more taxes than what they had declared,” Bhattarai stated. “On average, each active company is liable for around Rs 500,000 in additional taxes.”
The total additional amount—Rs 25 million—was calculated after documents were seized from several companies. Although 53 paragliding companies are registered in Pokhara, only those actively conducting business operations are subject to this tax collection. The investigation covered financial records from mid-July to mid-March of the last fiscal year.
Investigation Process and Non-Compliance
Bhattarai explained that the tax office collected all documents through the Nepal Airsports Association (NAA), the umbrella organization overseeing paragliding activities in Pokhara. Additional documents were also gathered directly from the companies.
“Some companies were operating flights under quotas given by NAA but were still found evading taxes. A few didn’t even acknowledge official notices, and their internal records didn’t match the figures we received,” she said.
Moreover, some individuals were found to be operating multiple companies, complicating the investigation process further.
Industry Perspective and Pricing Disputes
Anil KC, president of the Nepal Airsports Association, confirmed the investigation and acknowledged past issues in financial transparency and pricing inconsistencies.
“There were problems before the current NAA executive committee took over in August–September. Some companies charged Rs 7,500 per flight while others charged Rs 8,500, but taxes were inconsistently reported,” KC said.
He further explained that the Inland Revenue Office applied the higher fare rate of Rs 8,500 across the board, leading to confusion and disputes about tax obligations.
“The lack of uniformity in flight pricing led to differences in tax filings. However, some companies clearly underreported their revenues, making enforcement action necessary.”
Stricter Enforcement and New Measures
To restore financial discipline, the NAA has implemented stricter monitoring mechanisms. Paragliding companies are now required to issue boarding passes only after taxes are paid and receipts are verified.
Despite being an off-season period, approximately 50 tourists take paragliding flights daily in Pokhara. However, with about 250 registered pilots, the sector is facing underemployment, adding to the operational challenges.
Outlook
This move signals a tightening of regulatory enforcement in Nepal’s lucrative tourism-based adventure sports sector. The IRO’s action serves as a warning to other operators in the tourism industry regarding the consequences of non-compliance. Both the IRO and NAA have expressed commitments to ensure greater financial transparency, fair tax practices, and sustainable operations moving forward.
