PhonePe’s investors paid a steep price to migrate to India, according to CEO Sameer Nigam, who said that the digital payments firm’s choice to transfer from Singapore cost its investors a “shocking” amount of money “Capital gains taxes totaled Rs. 8,000 crore.
Details about PhonePe’s investors paid taxes totaling 8000 crore to make India their home
“Moving domicile from another market to India is treated as a capital gains event… As a result, you must do a new market value and pay tax on the delta “In a YouTube conversation, Nigam told PhonePe’s chief technology officer Rahul Chari.
PhonePe, which is funded by Walmart Inc. and Tencent, may also lose the opportunity to deduct $900 million in cumulative losses from future profits since local tax authorities consider the change of domicile as a restructuring event.
“Change of domicile back to India is a rare phenomena, as corporations historically opted to establish up in tax havens such as Singapore or Mauritius. However, with the offset of multilateral instruments and the replacement of double tax treaties, tax havens are becoming less appealing because operating from there will incur additional costs,” said Atul Puri, managing partner and cofounder of tax advice firm SW India.
“According to Section 79 of the Income-tax Act 1961, if there is a change in beneficial ownership of shareholding of more than 50% between the end of the year in which the losses were incurred and the end of the year in which the losses were incurred, the company will not be able to carry forward such losses and set off against profits of future years,” said Rahul Charkha, partner, Economic Laws Practice. The ownership of PhonePe was reformed as a result of the change of domicile.