Pathao Nepal MD Backs Proposed 5% Ride-Sharing Tax, Calls It a Balanced Approach

 

Kathmandu. Pathao Nepal MD Yeshu Thakali has welcomed the government's proposal to impose a 5 percent tax on ride-sharing services through the Finance Bill, 2083, describing it as a balanced measure that formally recognizes the ride-sharing industry while avoiding a heavier burden on consumers.

Speaking about the proposed provision, Thakali said the tax would help address longstanding ambiguity regarding taxation in the ride-sharing sector. Until now, there had been uncertainty over whether a 13 percent value-added tax (VAT) should be imposed on the entire fare or only on platform service fees.

“The 5 percent tax has brought some clarity to the sector,” he said, adding that the government's decision to include ride-sharing services within the tax framework also amounts to formal recognition of the industry.

According to Thakali, imposing a full 13 percent VAT would have significantly increased costs for consumers, many of whom rely on ride-sharing services because they do not own private vehicles. While the proposed 5 percent tax may slightly increase fares, he said it is considerably less burdensome than a 13 percent VAT and aligns with practices in neighboring India, where ride-sharing services are also subject to a 5 percent tax.

Thakali said the tax is likely to be collected by ride-sharing platforms from customers and remitted to the government. Using Pathao as an example, he noted that the company currently charges an average platform fee of around Rs 12 per motorcycle ride, equivalent to roughly 3.8 to 4 percent of the total fare.

“Since the proposed 5 percent tax is higher than the service fee currently charged by the company, the platform itself cannot absorb the cost. The additional charge will likely be passed on to consumers,” he said.

Despite the added cost, Thakali does not expect the tax to significantly disrupt the ride-sharing market. He argued that rising fuel prices and inflation driven by global conflicts currently pose greater challenges to the transportation sector than taxation. Nevertheless, he acknowledged that the new levy would place some additional financial burden on service users.

He also pointed out that questions remain regarding the implementation of the tax on taxis operating with black number plates, which are categorized as public transportation. According to him, greater clarity will emerge only after the bill is passed and the government issues detailed implementation procedures.

Commenting on the broader national budget for the upcoming fiscal year, Thakali said he views it positively. He noted that revisions to personal income tax thresholds are expected to provide relief to middle-class citizens, while the salary increase announced for government employees after three years could stimulate economic activity by boosting demand and consumption.

Thakali also praised the budget's focus on the information technology sector and data centers. He said that for a landlocked country like Nepal, exporting services is often more feasible than expanding manufacturing, making the government's prioritization of the service sector a positive step for economic growth.

Based on a conversation with Pathao Nepal CEO Yeshu  Thakali regarding the proposed 5 percent tax on ride-sharing services in the Finance Bill, 2083.

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