Fortune News | Jan 05,2020
Despite a dispute over the taxation of e-ticketing with the Ministry of Revenues (MoR), Kelal Ticket Online Travel Agency has partnered with Nib International Bank to facilitate electronic payments for cross-country transportation. The company is the owner of Kelal Ticketing, a digital services technology that allows users to buy cross-country bus tickets remotely.
The company was established by two members of the diaspora, Hamdi Jami and Ephrem Getachew, in March 2020 with a capital of 1.5 million Br. The digital platform was launched in September last year and Kelal started its operation in partnership with Zemen Bus.
The platform came in handy for transport companies in light of a regulation issued by the Transport Authority under the Ministry of Transport obligating them to sign a partnership with electronic payment issuers. The letter sent out in mid-December of last year states that, as the previous working mechanism is backwards and susceptible to illegal dealing, ticketing is to be transitioned into electronic systems.
The cross-country transport companies were asked to report back to the Authority having made dealing with digital services provider of their choosing by the end of 2020, just weeks after receiving the letter.
However, the road has not been rosy for the founders who relocated from Europe in hopes of investing in digital technology in Ethiopia. The ticketing system was operating seamlessly for four months in partnership with Zemen Bus until Kelal got into a dispute with the Ministry of Revenues.
Hoping to expand its services by partnering with private limited companies (PLCs), Kelal requested permission from the Revenues Ministry, according to Ephrem Demesa, deputy CEO and shareholder of the company. The company submitted a permission request letter to the Ministry in August 2020 but came upon a stumbling block.
As a sole proprietorship, cross-country buses are obliged to pay a pre-defined amount of tax while for private limited companies, the amount must be calculated based on each sale generated. This procedure created a complication whereby the Ministry had to interject and request Kelal to fulfil certain requirements to be allowed to work with PLCs.
The outstanding issue that is yet to be addressed was the accuracy of the data generated by the online platform. The hesitance from the Ministry arose from its belief that the online transactions made could be tampered with, making it hard to accurately impose taxation on the companies.
The owners were asked to comply with requirements such as enabling a sequential ticketing system and providing details about travellers. However, even though these requirements were fulfilled, the Ministry was still sceptical and raised the question of trust, according to Ephrem.
"We come up with options and they tell us no," said Ephrem.
Despite continuous deliberation with the Ministry on the matter, Kelal has yet to receive a solution. Several attempts to elicit a response from the Ministry of Revenues proved unfruitful before this edition went to print.
An electronic transaction law passed in May last year states that electronic receipts are legally recognised as long as the e-receipt is prepared in the form of an electronic message. The electronic message fulfils the contents of a paper-based invoice and ensures that it is traceable, reachable and readable if and when it is needed for future comparison or investigation.
Yohannes Woldegebrie, a tax law expert, cites that this law has given the green light for online transactions to be made and it is unreasonable for the Ministry to prohibit the ticketing service provider to be operational.
In addition to its partnership with Kelal Ticketing, Nib Bank, which has collected 39 billion Br in deposits so far, announced last week that it is working with Ethio-telecom to facilitate telecom utility payments digitally. It is also partnering with Flocash, an online payment facilitator, and GuzoGo, a digital travel booking platform, to allow its customers to purchase air tickets through their devices.
PUBLISHED ON May 29,2021 [ VOL 22 , NO 1100]
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