Kathmandu — The Office of the Auditor General (OAG) has raised concerns over billions of rupees spent by alcohol and tobacco companies on advertising and promotional activities despite legal restrictions under Nepal’s public health laws.

In its 63rd Annual Report, the OAG noted that Section 45(1) of the Public Health Service Act, 2018 prohibits the production, distribution and promotion of advertising materials related to products harmful to human health, including alcohol, cigarettes and tobacco products. However, the provision has not been effectively implemented.

The report states that while granting production permits for alcohol and beer, authorities allowed companies to manufacture products under their own brands, sizes and standards in accordance with existing excise, liquor and public health laws.

The OAG questioned expenses claimed by 13 taxpayers under the Large Taxpayer Office during the fiscal year 2080/81. These companies reported spending Rs 476.83 million on advertising and Rs 7.51 billion on marketing, sponsorship, research, brand development and promotion related to alcohol and tobacco products.

In total, the questioned expenditure amounts to Rs 7.987 billion.

According to the OAG, allowing tax deductions on expenses incurred in legally restricted sectors has directly affected government revenue collection.