By India Blooms News Service Jan 05, 2023
New Delhi: The Indian government has imposed a tax of $ 1 billion on Walmart and digital payments company PhonePe for shifting the latters base to India from Singapore, Bloomberg reported.
PhonePe was bought by Flipkart in 2016. After acquiring the parent company Flipkart Online Services Pvt, Walmart got majority ownership in PhonePe and moved the payment firms entire base from India to Singapore.
Even as PhonePe separated from Flipkart completely, US retail chain giant Walmart continues to be the majority stakeholder in them.
The huge tax bill arises also because of the increase in the valuation of PhonePe, said the report.
The fintech firm is raising funds at a $12 billion pre-money valuation from General Atlantic, Qatar Investment Authority and others, triggering the hefty charge, the report said citing people aware of the matter.
Some big investors including Tiger Global Management have now purchased shares of PhonePe in India at the new price, leading to tax implications of roughly 80 billion rupees for existing shareholders, one of the people said, the report added.
Over 8,000 Indian startups have incorporated in Singapore since the year 2000, according to a report by India Briefing.
This is because of the friendlier tax regime, ease of getting foreign investments and simpler processes for public debuts on foreign exchanges.
PhonePes relocating to India is a surprise move, according to the report.
Further, its separation from Flipkart and raising funds at a high valuation also come at a time when startups around the world are struggling to attract funding and facing depleting valuations.
The report said that PhonePes shift could be a precursor to the digital payments company preparing for a stock market listing in India.
Any company listed outside India would have a tough time getting approvals from Indias financial and banking regulator, the Reserve Bank of India.
India also prohibits companies headquartered in India from directly listing on overseas bourses.