Why did US retail giant Walmart get a billion-dollar tax bill?

 US company Walmart recently received a billion dollar tax bill from India, according to media reports. People in the know have said that Walmart has already paid most of the sum owed. Let’s take a closer look: Why the large tax bill? This came after Walmart shifted PhonePe’s headquarters from Singapore to India and the rise in value of the company after a fresh round of funding, people familiar with the matter told Bloomberg. The retail giant became the parent company of the digital payment company PhonePe after purchasing Flipkart in 2018. Flipkart had acquired PhonePe in 2016. Persons briefed on the ongoing financing told Economic Times the payment is a long-term capital gains tax as the company raises fresh capital from investors at a higher valuation. As per Bloomberg, PhonePe is raising a billion dollars in financing at a $12 billion pre-money valuation from General Atlantic, Qatar Investment Authority, and others. Investors like Tiger Global Management have now bought PhonePe shares at the new price, people in the know told Bloomberg.

The fintech firm was previously valued at $5.5 billion in December 2020, Moneycontrol reported.

As per Economic Times, a secondary share sale will also occur during the funding – which means that total capital raised would reach nearly $2 billion. A secondary share sale sees new investors or the company itself purchasing shares from existing shareholders, including those that have employee stock ownership plans. “The funding round is largely closed now, and this would be a significant windfall gain for the government. The valuation difference is significant and that will show up in the total tax payout as well,” a source told the newspaper.

Walmart has already made the payment, as per Reuters.

“Walmart has already paid most of the 78 billion rupees ($943.01 million)that was incurred as a capital gains tax after PhonePe investors sold their stake in the Singapore entity and invested in the Indian entity following the domicile change,” a source with direct knowledge of the matter had told Reuters. While Walmart did not offer any further details, a PhonePe spokesperson confirmed to Reuters that Walmart and other investors paid the capital gains tax bill. It was the “right long-term strategy,” the spokesperson added. As per Moneycontrol, PhonePe is following in the footsteps of Flipkart by shifting its headquarters to Bangalore. [caption id=“attachment_9080411” align=“alignnone” width=“1280”] PhonePe was founded in 2015. [/caption] As per the report, it is an unusual step for an Indian startup to move its base. Tech companies with the bulk of their operations and business in India have for years chosen to incorporate in Singapore because of the friendlier tax regime, ease of getting foreign investments and simpler processes for public debuts on foreign exchanges, as per the report. Walmart last month said it had separated PhonePe and Flipkart. It added that it would remain a majority stakeholder in both companies. PhonePe was founded in 2015 as a digital and phone payments system company. It is among the largest such companies in India with over 35 crore users and a revenue of Rs 1,600 crores, as per Tech Story. PhonePe in 2022 acquired Wealth management fund Wealth Desk for 50 million dollars and wealth management platform OpenQ for 25 million dollars. The company did so to expand its services offered, as per Tech Story. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.