The Nepalese film industry is making waves on the international stage, but it is facing an existential crisis at home. In a powerful gesture of solidarity, cinemas across Nepal will go on strike for a day on February 5th to protest against exorbitant government taxes. The closure serves as a symbolic plea for relief from the burdensome financial strain faced by the industry.
An International Spotlight, an Internal Challenge
Nepal has been gaining international attention with films like “Shambhala,” which is set to premiere in competition at the upcoming Berlinale, and “The Red Suitcase,” which has been showcased at prestigious festivals in Venice, Zurich, and Mumbai. Additionally, Nepal’s projects regularly secure spots in renowned international financing markets. However, despite this global recognition, the industry is grappling with a less favorable reality at home.
The Burden of High Taxes
Over the past decade, multiplex screens have become the primary revenue source for both local and foreign films in Nepal. In contrast to the past, when single screens reigned supreme, the government has implemented a 15% Film Development Board (FDB) tax on foreign films and a 5% local tax on all films. These taxes are in addition to the 13% value-added tax (VAT) levied on all goods and services. The cumulative effect is an overwhelming 33% tax per ticket.
A Struggle for Survival
Such exorbitant taxes are not imposed on any other goods or services except tobacco and liquor. The government’s perception of cinema as a luxury or non-essential service has resulted in an unfair burden on the industry. While theaters were able to endure these high taxes in the past due to high occupancy and less competition, the current landscape is different. New projects have come to a halt, and existing cinemas are on the brink of closure. The cinema owners are serious about their protest and have vowed to shut down theaters if the government fails to reduce taxes on entry fees.
The Hurdles Ahead
Producer Narendra Maharjan, serving as the general secretary of the Nepal Film Association (NFA), highlights the dire situation faced by the industry. He asserts that in the face of these long-standing taxes, the number of screens in the country has dwindled from 450 to 150. Unlike neighboring India, where the government provided a tax holiday to boost the establishment of multiplexes, Nepal lacks such support. The high taxes have deterred corporate houses from entering the exhibition sector.