The government has asked Tootle, a ride-sharing company, to pay Rs 33.9 million in taxes. The amount was finalised by the Inland Revenue Department and includes income tax and value added tax from the fiscal 2016-17 till date.
As per IRD, Tootle needs to pay VAT worth Rs 17.5 million and income tax worth Rs 16.4 million. The tax office has also assessed another ride-sharing company, Pathao, and asked it to pay nearly Rs 2.5 million in taxes.
“We had sent letters to both the companies asking them to pay taxes as soon as possible. They have submitted written response to the respective tax offices,” said Yagya Prasad Dhungel, deputy director general at IRD.
Tootle submitted its reply to the revenue office in Lalitpur stating that it was not aware of taxes in the initial stages due to lack of knowledge about the country’s taxation system.
“They have stated in their replies that they do not need to pay taxes as there is no such law related to ride-sharing services, but as per law they have to pay the aforementioned amount,” Dhungel added. “Any business operating in Nepal needs to pay income tax. Moreover, since they have been collecting VAT from passengers, they need to pay the same to the government,” he clarified.
Tootle was collecting 13 per cent VAT from service seekers, but was not paying the amount to the government. Moreover, the company had been collecting VAT without a permit to do so. Tootle has now registered at the VAT office.
Sixit Bhatta, co-founder of Tootle, said the company was obtaining the necessary information regarding taxes and the process of paying taxes from the IRD. “We are also planning to ask IRD to review the tax amount.”
According to Dhungel, the said amount also includes additional 25 per cent tax liability. The IRD has also concluded that Tootle will have to also pay corporate income tax in the future.
Sub-section 1 of Section 8 of the Motor Vehicles and Transport Management Act states motor vehicles registered as private vehicles are prohibited from being used for public transport service.