Online tax filing portal Befiler has announced a $1.5 million seed raise from international and local investors, the company announced in a statement today.
The round was co-led by US-based Cistech Capital and Pakistan’s Lakson Venture Capital (LVC), along with participation from local investors. Befiler has earlier received a Rs3 million grant from the State Bank of Pakistan (SBP) as part of the central bank’s Innovation Challenge Facility (ICF) for Digital Financial Services.
The process of filing tax returns directly with the Federal Board of Revenue (FBR) is cumbersome, requiring knowledge about how taxes work, the information that needs to be reconciled and then submitting that information at the tech-based platform of the FBR. There are two hurdles in this process: knowledge about how taxation works and financial literacy is low, and a majority of the people are not reasonably tech savvy to be able to file their returns online directly with the FBR.
As a consequence, people end up turning to lawyers to file their tax returns for them against a fee. Except that in this case, the fees could run in a few thousand rupees.
Befiler is gunning to solve this problem that if people face complications in filing tax returns directly with FBR, the app makes it easier for them by collecting very basic information on the app and making calculations easy, and using in-house representatives throughout the process to make filing easier. And it does so by charging a fee that would be less than what a lawyer would charge.
In fact, Befiler is hoping that with such mechanism in place, at least those people that do not file tax returns because of these reasons would be encouraged to do so.
“From scratch, tax laws have been incorporated so that a user does not have to worry about them,” says Akbar Tejani, the founder and CEO of Befiler told Profit. “A simple question like what is the salary and how much tax has been deducted from that, and the resulting impact on the wealth in terms of tax credit, all that is taken care of in the portal.”
The other problem with filing directly with the FBR, which Befiler says it mitigates, is accuracy. While filing returns in the FBR’s systems, any inaccuracy can lead to notices from the FBR. On the other hand, Befiler is focused on decreasing the inaccuracies to begin with reducing the chances of FBR haunting a filer because of these inaccuracies.
But since its launch in 2019, Befiler has been able to accumulate over 20,000 active taxpayers on the platform – a slow growth trajectory while Pakistan’s active taxpayers stand at 3.38 million. The startup, however, says it has 460,000 users that use other services like advisory and company incorporation in the US beside filing tax returns.
In its defence, Befiler is unlike your eCommerce startups that users can order products from on a recurring basis.
Filing returns happens only once a year in a country where people are usually reluctant to pay direct taxes. The higher income groups, on the other hand, hire professional consultants to manage their finances who find ways around taxation and file returns for them.
Any growth would be slow and not based on discounts, but rather through word of mouth or other marketing efforts. Befiler has, therefore, been a startup that has been focused on controlling burn, generating better unit economics, as Akbar says.
“We are focusing on increasing retention and reducing cost of acquisition to keep our unit economics positive. We understand that times are tough and we have managed to keep growing at a level that burn is controlled and it does not come at the cost of sustainability,” says Akbar.
The initial round of funding for the startup comes after a period of over three years while startups in Pakistan have been aggressively raising funds. According to Akbar, fundraising late was to avoid any major dilution during early stages of the startup.
“Earlier, it was just an idea and investors would have been taking most of the risk which would have led to major dilution for founders. We wanted to avoid that. Now that we have proven this to be workable, we have raised the round,” Akbar says.
According to Akbar, the round was raised at a good valuation, which was not disclosed to Profit.
The company plans to spend the $1.5 million on expansion, with a sizeable chunk going towards product development and adding new product offerings.
The startup further plans to enter into partnerships with corporates and business associations to increase documentation and tax compliance.
You might also like
- Spotify the Most Downloaded Audio Streaming App in Pakistan for 2022The music streaming app Spotify recently crossed 200 million paid subscribers globally with the overall listener base expected to cross 500 million by March 2023. Karachi, February 03: According to a […]
- MCB partners with Telenor to facilitate its digital banking customersMCB Bank Limited, one of Pakistan’s leading banks, has entered into a strategic partnership with Telenor Pakistan, a leading telecommunication services provider, to facilitate its digital banking customers with greater access […]
- realme 10 Pro 5G Coca-Cola Edition to Launched on February 10thThe world’s fastest growing smartphone brand, realme, announced its collaboration with Coca-Cola® and introduced its first Coca-Cola edition smartphone, the realme 10 Pro 5G Coca-Cola Edition, which will be launched on […]
- Bank Alfalah kept its growth trajectory in 2022The Board of Directors of Bank Alfalah Limited (BAFL), in its meeting held on February 2, 2023, approved the Bank’s financial results for year ended December 31, 2022. The Bank posted […]
- Fatima Fertilizer teams up with Multan Sultans for PSL season 8Lahore: Fatima Fertilizer signed a Memorandum of Understanding (MoU) agreement with Multan Sultans, renewing their partnership for the eighth season of PSL which is due to start on February 13, 2023. […]