As reported by Bloomberg, the bill originates from PhonePe’s relocation and increase in value, for which Walmart took majority ownership of after having completed the acquisition of the parent company, Flipkart Online Services in August 2018.
PhonePe separated from Flipkart and re-domiciliated form Singapore to India in December 2022. Earlier that same month, it announced it is raising funds at USD 12 billion pre-money valuation from General Atlantic and Qatar Investment Authority, amongst others. This is one of the reasons that is believed to have triggered the charge.
Furthermore, the source stated that investors of the likes of Tiger Global Management have now purchased shares of PhonePe in India at the new price, which is thought to have led to tax applications of approximately 80 billion rupees for existing shareholders.
Similar to online retailer and parent company Flipkart, PhonePe is looking to shift its headquarters to Bangalore, a step that is considered unusual when it comes to India-based startups moving home. Throughout the years, technology companies that had the bulk of their operations and business in India had chosen to incorporate in Singapore due to its ‘friendlier’ tax regime, ease of receiving foreign investments, as well as simplified processes when it comes to public debuts of foreign exchanges.
As per an India Briefing report quoted by Bloomberg, starting with the year 2000, more than 8,000 Indian startups have incorporated in Singapore. PhonePe’s latest moves, those of relocating to India, carving itself out as separate entity from Flipkart, and the high valuation funds’ raising, come at a time when startup firms all over the globe struggle with raising funds and face deflating valuations.
PhonePe’s shift is believed to be a precursor to the digital payments company preparing for a stock market listing in India. However, it is thought that any payments firm listed overseas would encounter difficulties in receiving approval from the country’s financial and banking regulator, the Reserve Bank of India. As of now, the government forbids companies headquartered in India from directly listing on overseas exchanges.
According to the Asian Development Bank, India has more than 26,000 startups, which makes the country the third-largest startup ecosystem in the world, with more than 100 of these being valued at USD 1 billion, which makes them unicorns, as reported by Bloomberg.
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