After the digital payments startup moved its headquarters to India, Walmart Inc. and other PhonePe stockholders will be required to pay close to $1 billion in tax, according to people with knowledge of the situation.
Walmart Inc. and PhonePe shareholders to pay $1 billion in taxes
The cost is due to PhonePe Pvt’s relocation and increase in value. Walmart acquired a controlling stake in PhonePe Pvt after acquiring its parent company, Flipkart Online Services Pvt.
The fintech company is raising funds at a $12 billion pre-money valuation from General Atlantic, Qatar Investment Authority, and others, resulting in the hefty charge, the people said while declining to be identified discussing a private matter. The fintech firm has now separated from Flipkart and has changed its domicile from Singapore to India.
Emails requesting comment from Walmart, Flipkart, and Tiger Global representatives did not immediately receive a response. A spokesperson for PhonePe declined to respond.
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PhonePe shifting headquarters to Bangalore
Like its previous parent company Flipkart, online retailer PhonePe is moving its headquarters to Bangalore. Moving home is an unusual decision for an Indian startup.
Technology firms with the majority of their operations and business in India have long opted to register in Singapore due to the country’s more benevolent tax laws, ease of attracting international capital, and streamlined procedures for making their public debuts on foreign exchanges.
According to a study by India Briefing, over 8,000 Indian companies have been registered in Singapore since the year 2000.
PhonePe’s three significant actions—moving to India, separating from Flipkart, and raising money at a high valuation—come at a time when startup companies all over the world are finding it difficult to get money and are dealing with deflated values.
PhonePe preparing for stock listing in India
The change at PhonePe could be a sign that the digital payments business is getting ready to float on the Indian stock market.
According to one of the persons, it would be difficult for any payments company listed outside to receive approval from India’s financial and banking regulator, the Reserve Bank of India.
Companies with their headquarters in India are currently prohibited by the government from directly listing on foreign exchanges.
According to the Asian Development Bank, India has over 26,000 businesses, making it the third-largest startup ecosystem in the world. At last count, more than 100 of these startups were unicorns with a $1 billion valuation.
Also Read: Flipkart: Walmart Would Raise $2 to $3 Billion For Flipkart at a Value Of Over $40 Billion. Report
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