When and why payment is mandatory
Walmart Inc and other shareholders of PhonePe will have to pay about US$1 billion in tax, according to people familiar with the matter, due to shifting PhonePe to India and Walmart’s billion-rupee tax bill. Payment is mandatory when the digital payment company PhonePe transfers or shifts its head office to India.
owned by walmart
The tax bill of around INR 82.72 billion in Indian currency has come to the fore following the transfer and price hike of PhonePe Pvt. The majority ownership has moved to Walmart after it acquired parent organization Flipkart Online Services Pvt.
PhonePe raising $12 billion
Significantly, after separating from Flipkart, PhonePe has shifted from Singapore to India. PhonePe is raising $12 billion at a pre-money valuation from General Atlantic, Qatar Investment Authority and others, said people familiar with the matter on the condition of anonymity for the whopping Rs 87.72 billion tax bill.
80 billion rupees tax in future…
Investors, including Tiger Global Management, have now bought shares of PhonePe in India at the new price, said a person with knowledge of PhonePe’s move to India. This will have a future tax impact of approximately Rs 80 billion on shareholders.
Walmart buys Flipkart, overtakes Amazon. Oneindia Hindi
Shifting from abroad to India is not normal
Representatives of Walmart, Flipkart and Tiger Global did not respond to email queries on the matter, NDTV reported. PhonePe spokesperson also declined to comment. According to reports, the parent company is online retailer Flipkart. Similarly, PhonePe is shifting its headquarter to Bangalore. In the opinion of people associated with the business world, it is an unusual move for an Indian startup to shift from abroad to India.
Doing business in Singapore is easy! Over 8000 Startup Shifts
Over the years technology companies with most of their operations and business in India have opted to move to Singapore. This is attributed to a company-friendly tax system, ease of access to foreign investment, and simplified procedures on foreign exchanges. According to a report by India Briefing, over 8,000 Indian startups have moved to Singapore in the last two decades since 2000.
Fund challenge in front of startup
PhonePe’s three key decisions – to shift to India, carve itself out as a separate entity from Flipkart and raise money at higher valuations. All three come at a time when startup firms around the world are struggling to raise funds. Due to this, their price is also falling.
There will be trouble in getting permission from RBI
PhonePe is preparing for stock market listing in India. In such a situation, this decision can prove beneficial for the future of this digital payment company. Any payments firm listed abroad would struggle to get the go-ahead from India’s financial and banking regulator, the Reserve Bank of India, said one person.
Startups and Unicorns in India
The government currently forbids companies headquartered in India from directly listing on foreign exchanges. According to the Asian Development Bank, India has over 26,000 startups, making it the third largest startup ecosystem in the world. At last count, over 100 of these startups were valued at close to a billion dollars. These are known as unicorns when they increase in value. However, now all eyes are on Walmart. According to the Economic Times, when the tax payment of Rs 87.72 billion will be made, the Indian government will get huge revenue.