The tax authority has said it would recover the tax liability determined for Tootle, a ride-sharing company, as any other dues, as it has neither paid the determined tax nor sought an administrative review.

Tootle’s competitor, Pathao, however, has sought a review through the director general of Inland Revenue Department as per the tax laws, according to the Inland Revenue Department.

As per the laws, a taxpayer can seek an administrative review by depositing one-third of the disputed amount while also making full payment of the tax that is indisputable.

The Inland Revenue Office, Lalitpur had determined the tax liability for Tootle at Rs 34 million while the Putalisadak-based tax office determined the liability for Pathao at Rs3 million.

The amount set for Tootle is combined of both Value Added Tax (VAT) and Income Tax for operating business for nearly three years while Pathao is subject to pay only VAT for starting service a few months ahead of the tax authority determining its liability.

Yagya Dhungel, spokesperson for the Inland Revenue Department, told the Post that Tootle would be treated as any other taxpayer that has dues after it failed to seek administrative review. “The application of Pathao is being reviewed at the department,” he said.

Two factors prevented Tootle from applying to the department for an administrative review.

“First, we don’t have enough money to deposit for seeking administrative review,” said Sixit Bhatta, co-founder of Tootle. “Second, Value Added Tax should hot have been imposed on the transport service as per the law. ”

Both Tootle and Pathao have been subject to pay huge amounts in VAT despite not raising such tax from the people who used their services.

The tax authority said Tootle had collected VAT from service seekers in the first year of its operation after it launched the service in the fiscal year 2016-17.

However, it did not levy VAT on service seekers in the following years. On the other hand, despite registering with VAT, Pathao had not raised VAT from its clients. Now, boh are registered in the VAT regime.

The tax authority is of the view that companies should pay VAT for doing business where VAT is applicable whether or not they raise VAT from customers.

Bhatta complained that they have been the victim of a lack of law on intermediary services in Nepal.

“We just charge a minimum amount from the fare charged by the bike owner. But the tax authority imposed VAT and Income Tax based on the total fee charged by bike owners on which we don’t have any control,” Bhatta said.

With the tax authority pursuing his company to recover the tax dues, he said the company could take a decision within the next seven to eight days.

These companies had expected that the budget for the fiscal year 2019-20 would give them some relief.

But the budget offered tax exemption only to unregistered start-ups that will get registered by mid-January next year.

“This is like giving relief to a person who has committed a big crime due to the police’s failure to identify him or her but penalising a person who has committed a minor crime,” said Bhatta.