“The remaining Covid-19 relief measures (mainly tax rebates to small taxpayers and businesses severely impacted by pandemic) should be removed in the fiscal year 2023/24 budget,” the IMF advised after its Article IV Consultation mission in February.
In 2022, then Finance Minister Janardan Sharma announced a number of measures in the budget for the current fiscal year 2022/23 to support small businesses and the tourism sector hit hardest by the pandemic. “To provide relief to small businesses affected by the Covid-19 pandemic, I have waived a 75 percent income tax to taxpayers with an annual turnover of up to Rs 3 million and a 50 percent income tax to a taxpayer with an annual turnover of between Rs 3 million and Rs. 10 million in the fiscal year 2021-22,” Sharma had announced while presenting the budget before the House of Representatives a year ago. Likewise, the budget for the current fiscal year has exempted a 50 percent tax on taxable income on tourism industry businesses such as hotels, travel, trekking, and cinema producers that were most affected by the pandemic. Likewise, annual license and renewal fees were waived for the fiscal year 2022/23 for businesses related to the tourism and hospitality sector. In the budget, the government continued concessional loans for the revival of the tourism sector. As businesses in several sectors are recovering fast from the impacts of the pandemic, the government is preparing to end the relief measures. According to the National Account Estimates for the current fiscal year released by the National Statistics Office (NSO) last week, the tourism sector has rebounded as tourist arrivals in the country are reaching pre-pandemic levels.NSO has estimated the country’s economy will grow by just 2.16 percent in the current fiscal year. But accommodation and food service activities related to tourism are expected to grow by 18.56 percent. The Nepal Rastra Bank (NRB) has also stopped providing refinance facilities for businesses affected by Covid-19. The outstanding amount of refinancing provided by NRB remained at Rs 7.12 billion in mid-March 2023. The central bank approved a refinance facility of Rs 148.75 billion in FY 2020/21. As many as 48,890 businesses borrowed money from the package in that fiscal year, the NRB said. In FY 2021/22, the central bank approved a refinance facility of Rs 115.70 billion, benefiting as many as 24,305 borrowers. In line with the monetary policy that sought to limit the refinance amount, the outstanding amount of refinance has gone down. The monetary policy for the current fiscal year states the refinance facility will be continued, but will be limited to productive sectors including agriculture, small enterprises, and export-oriented businesses. “Such a facility will be gradually reduced to the amount available in the refinance fund by mid-July 2024,” reads the monetary policy.
