Walmart Pays $1 Billion Indian Tax Bill
Walmart Inc. has fully paid $1 billion in taxes owed to the Indian tax authorities as a result of India’s largest online payment platform, PhonePe, changing its domicile from Singapore to India in October 2022.
A Walmart spokesperson based in India confirmed January 5 that the company was liable for $1 billion in taxes because of PhonePe’s redomicile, which PhonePe had announced on October 3, 2022. Contrary to various media reports, Walmart has finalized its payments to the Indian government, the spokesperson told Tax Notes.
In an October 2022 release, financial technology company PhonePe announced that its businesses and subsidiaries, including its insurance and wealth brokering businesses, had been wholly acquired by PhonePe Pvt Ltd. in India. The release noted that its ownership interest in the Indus OS app store had also been redomiciled from Singapore to India.
In August 2018 Walmart and Flipkart, India's largest online retailer, announced that they had closed a deal giving Walmart a 77 percent stake in Flipkart at a cost of $16 billion, following through on Walmart's announcement in May 2018 that it would obtain a controlling stake in the company. The deal, which is Walmart’s largest-ever acquisition, means that Walmart now owns one of Flipkart’s previous group companies, PhonePe. Flipkart — which is headquartered in India but registered in Singapore — and PhonePe announced on December 23, 2022, that they are now established as individual entities.
Walmart operates over 20 wholesale stores in India, but the company had been unable to move deeper into the Indian retail market because of strict laws barring foreign entities from owning more than 51 percent of multibrand retail shops. Prices in the Indian commercial real estate market, which have surged over the past few years, didn't help matters. However, there are no ownership or real estate constraints in the e-commerce market, and the Flipkart acquisition gives Walmart a broad opening to access Indian consumers. In a May 2018 release, Walmart said the investment “underscores Walmart’s commitment to sustained job creation and investment in India, one of the largest and fastest-growing economies in the world.”
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Tax Notes Int'l, Jan. 9, 2023, p. 261
109 Tax Notes Int'l 261 (Jan. 9, 2023)
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