Walmart assures IT dept of tax compliance in Flipkart deal

As the Income Tax department keeps a close eye on the Walmart-Flipkart deal and sent them a letter as well, Walmart has assured the tax authorities that it will pay the taxes and that it will have the tax implication of the deal looked into as part of it acquiring a majority stake in Flipkart.

Walmart’s acquisition of 77% of Indian online retail major Flipkart may not be fully completed before the end of this year. The formalities are being completed and the process set in motion. One other big hurdle is also to obtain the approval of the Competition Commission of India for which the application has already been filed.

It is being reported that this communication to the IT department went out even before the official announcement was made in public. It was reported at the time that while Flipkart had responded to the Income Tax authorities, but Walmart had not replied. It is now learnt that Walmart has indeed sent a response confirming that the company is committed to complying with tax regulations in all the markets they operate, and they will have the matter examined and settle it to the satisfaction of the Income Tax authorities in India as well.

The IT department has also reportedly offered assistance Walmart in being able to determine the tax liability.

“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,” Economic Times quotes a Walmart spokesperson as saying.

Tax officials have possibly learnt from the Vodafone-Hutchison deals several years ago where they went very aggressive and it remained a major issue for a long time and finally the Indian Supreme Court struck down the demand of a huge sum as withholding tax. The government of the day did not budge and enacted an amendment to the statute to give teeth to the authorities to slap such tax notices.

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