Categories Retail

Flipkart deal: Walmart to pay $2 billion as tax to Indian government

Walmart (WMT) – Flipkart deal was wrapped up recently at a valuation of $16 billion making it the biggest e-commerce deal ever. The controversial Flipkart deal, which is poised to generate a lot of action in India, has certain roadblocks that could derail the deal. But in order to win a bigger slice of the e-commerce market, Walmart is ensuring that all the proceedings go on smoothly. The latest development is that the Arkansas-headquartered company has agreed to comply by the Indian government’s requirement by paying a tax of $2 billion.

This deal is seen as a game changer as it will unleash a new battleground between Walmart and its main rival Amazon (AMZN). According to a report by FactoryDaily, Walmart has agreed on paying a retention tax of up to $2 billion to Indian income tax department. If the deal sails through and the withholding tax is accepted by the authorities, this would be the largest tax payment made.

Walmart buys 77% stake in Flipkart

The deal currently awaits an approval from the Competition Commission of India (CCI), and sources claim that the fair trade regulator might bring in some structural changes to the deal. The deal has also received harsh criticism and opposition from groups such as Confederation of All India Traders (CAIT), All India Online Vendors’ Association (AIOVA), and Swadeshi Jagran Manch.

Related: Walmart shares plunge after announcing mammoth deal with India’s Flipkart

For Walmart, the market opportunity is huge in India. According to India Brand Equity Foundation, e-commerce industry in the world’s second most populated country is believed to grow up to $200 billion by 2026 from $38.5 billion in 2017. Much of this growth is aided by increased penetration of the internet and smartphones.

Walmart, which purchased 77% stake in Flipkart, is busy in accumulating funds for the deal and has set June 2019 as a deadline for completing this transaction.

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top