Walmart to comply with tax rule on Flipkart deal: CEO Doug McMillon

CEO McMillon says the retailer plans to run its cash-and-carry business and online retail separately for some time

Walmart Inc. will comply with any tax demand arising from its purchase of a stake in India’s e-commerce leader, a move that could help the global giant avoid festering litigation that overseas companies such as Vodafone Group Plc face in the South Asian nation.

“Our intent is, whether looking backwards related to our acquisition here or looking forward, we will be compliant with whatever the tax rules are,” Walmart Chief Executive Officer Doug McMillon told reporters in New Delhi. The world’s biggest retailer led a group that bought a 77 percent stake in Flipkart Online Services Pvt. in a deal valuing the Indian company at about $21 billion.

In its decade-long existence in India, Vodafone has spent a large part fending off tax claims on its 2007 acquisition of the Indian unit of Hong Kong-based Hutchison Whampoa Ltd., now part of CK Hutchison Holdings Ltd. Vodafone says no tax is payable as the transaction was done offshore while Indian authorities claim otherwise. Cairn Energy Plc was also ordered to pay $1.6 billion in taxes for selling a stake in Cairn India Ltd.

McMillon said the retailer plans to run its cash-and-carry business and online retail in the Asian nation separately for some time and will explore the option of implementing Flipkart’s payments ecosystem, including the PhonePe application in other countries.

Walmart’s international reach sprawls across 6,360 stores in about two dozen countries from Argentina to Zambia. Many were acquired during a buying spree from 1999 to 2009, but that era of aggressive flag-planting is long over. Today, its international business accounts for less than a quarter of Walmart’s total revenue, down from almost 30 percent five years ago.