Even as global retailer Walmart tries to convince the Competition Commission of India (CCI) to give it the necessary approval to its recent acquisition of Flipkart, it has now assured the Income Tax (I-T) authorities that it will comply with all the tax obligations related to the deal.
In a letter, Walmart said that it would fulfil all the regulatory requirements and get the tax implications of the deal examined.
Walmart’s letter follows a letter by the I-T department of India, which offered Walmart assistance, if required, in determining the tax liability and informed it about the tax laws on indirect transfers.
It is mandatory for all entities, resident and non-resident, having a business connection in India to withhold tax even if a transaction is executed on foreign soil but the underlying asset is Indian. This is subsequent to the amendment on indirect transfers that was introduced in Section 9(1)(i) of the Income Tax Act as part of the 2012 budget.
In a statement, a Walmart spokesperson said, “We take seriously our legal obligations, including the payment of taxes to governments where we operate. We will continue to work with Indian tax authorities to respond to their inquiries.”
While Walmart has targeted to raise funds for the Flipkart acquisition by June 2019, it plans to close the $16 Bn deal for 77% stake by the end of 2018.
Source: INC42
