Tootle breached tax law, hold it to account

Published On: January 24, 2019 02:00 AM NPT By: Republica  | @RepublicaNepal

When Metropolitan Traffic Police last week detained motorcyclists associated with providing ride-sharing services, there was outrage against the crackdown, and rightly so. The government authority continued cracking down on Tootle and Pathao, two motorcycle ride-sharing companies, further raising public outrage against the move. The authority claimed that the services they were providing were “illegal” and Department of Transport Management claimed “none of these companies” were “registered” but public trust on Tootle and Pathao was such, they were not convinced. Otherwise little known services such as Tootle and Pathao came to wider public notice. Apparently, many people had benefited from these services and the public raised voice against the government move in social media. So much so that Prime Minister K P Oli had to intervene and direct the authorities to allow Tootle and Pathao to continue their services. The real story, it now seems, was yet to come.

It has been found that Tootle, a ride-sharing service provider, has collected 13 percent Value Added Tax (VAT) from riders for the 19 months but it has not paid that tax to the government. Tootle collected VAT from riders since its inception in January 2017 to July 2018. But it was not registered as a VAT paying company. The company was charging Rs 9.78 as VAT for a total fare of Rs 85 for a shared ride of 4.4 kilometers. This is not only a breach of public trust on the company but also the clear case of tax evasion. It should be dealt with as such. Sixit Bhatta, chief executive officer of Tootle, says that his company collected VAT in the initial stages due to lack of knowledge about the tax system. Ignorance cannot be any excuse when it comes to the basic duty of paying tax to the government from the money collected from none other than the service seekers. Besides, Bhatta does not seem to have any idea about the status of money collected as VAT during the 19 months. He told Republica that he had to check with the company’s accounts. This is egregious mistake and Tootle operators need to be held accountable for violating tax laws. 

Young entrepreneurs like Bhatta should be praised for applying innovation in business. Tootle and Pathao are app-based transportation services. Persons who have two-wheelers and obtained driving licenses can become the “partners” and provide services to the customers. No doubt, this was an innovation itself and the operators provided a great relief to the people by providing services at much cheaper rates in the city where taxi fares are exorbitantly high. The idea was developed in the wake of 2015 blockade which had crippled vehicular movement in Kathmandu Valley. Such services need to be promoted but young and educated entrepreneurs are also expected to live by example to inspire others to become transparent and accountable in their business dealings. Tootle operators have set the bad example. They need to be held accountable for this inexcusable mistake.

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