The Walmart-flipkart deal is a possible nightmare for the tax department t given the complex holding structure of the indian e-commerce giant.
THE NEWS OF THE Walmart-Flipkart deal has set tongues wagging. It is expected to run into a tax tangle in India as experts predict that a Hutchison-Vodafone like scenario could emerge given that the Walmart-Flipkart deal will involve many overseas entities.
In the $16-billion deal, US-based retail giant Walmart is buying 77 per cent in Indian e-commerce company Flipkart, in which a majority share is held by a Singapore-registered entity, Flipkart Singapore. Shares in this entity are, in turn, held by different investors – prominently, Softbank (almost 23 per cent), Tiger Global (20.5 per cent) and Naspers (13 per cent). Chinese firm Tencent holds around 6 per cent stake, while promoters Sachin Bansal and Binny Bansal together hold close to 11 per cent.
The deal is being structured in such a way that some of these investors would transfer their shares to Walmart, thus creating a situation where most of the shareholders would be non-residents of India. Sample this: Softbank has invested $2.5 billion in Flipkart through its Jersey-based Vision Fund (its investment, reportedly, is now valued at $4 billion), while Tiger Global is a Mauritius entity.
Even in the case of the Vodafone-Hutchison deal of 2007, the former acquired 67 per cent stake in Hutchison-Essar Ltd from Hong Kong-based Hutchison Group for $11.2 billion through a maze of subsidiaries based in the Netherlands and Cayman Islands. No tax was paid on this deal to Indian authorities owing to the overseas nature of the transaction.
The pertinent question now is whether the capital gains made in the Flipkart share sale by non-resident investors are taxable in India or are we heading for another round of protracted tax dispute as seen in the Vodafone case?
Wading through Ambiguity
This story is from the June 17, 2018 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the June 17, 2018 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.