Nepal’s Casinos Resist Tax Hikes

Nepal’s casinos have won another delay in their fight with the government over stricter regulations and higher taxes. They say they can’t afford the increases, and a compromise could be on the horizon.

A nine-month standoff between the government of Nepal and the country’s casinos over a tax hike and a new, stricter regulatory regime may be coming to a close as ministers have given the industry two more weeks of grace to pay up in a signal they may be prepared to compromise.

Nepalese news site eKantipur reports that Tourism Minister Bhim Acharya has prevailed on the Cabinet to extend by 15 days the deadline for the industry to settle their tax bills and obtain new operating permits—the fourth extension since the new regulations came into effect last July.

The minister made the request on behalf of unions representing casino workers, and sources told eKantipur that Acharya is prepared to be flexible on the taxes and fees, which operators say they cannot afford to pay and remain in business. Casinos at the Hotel Grand in Pokhara and the Shangri La Hotel Kathmandu have closed down rather than comply, leaving 10 still operating, eight in Kathmandu and two in Pokhara, employing an estimated 3,500 Nepalese.

Provisions in legislation known as Financial Bill 2013-14 call for doubling the annual royalties on casinos and machine gaming venues to approximately US$409,000 and $307,000, respectively. License applications fees also were raised, and new rules were imposed requiring casinos to have a paid-up capital of at least $2.5 million.

The regulations are intended to assert public control over an industry that has not renewed its operating permits since 2006 and owes more than $6.7 million in outstanding taxes and royalties dating back to that year, the government says. Officials also say the casinos routinely disregard their tourist-only status and serve Nepalese citizens.

Operators mounted a legal challenge to those findings, but in March the nation’s highest court rejected their plea.