Why startups are flipping back to India in spite of the hefty tax bill

The thing is, if a company wants to move from another country to India as a domicile, it is treated as a capital gains event for existing investors

In October 2022, the Walmart-owned fintech firm, PhonePe, said it was moving its domicile from Singapore to India. In today’s lingo, it reverse-flipped.

As part of this, it had to go through three steps. First, it moved all its businesses, including insurance and wealth broking, and all subsidiaries of PhonePe Singapore to PhonePe Pvt Ltd India. Secondly, PhonePe’s board approved creating a new employee stock ownership plan (ESOP) and migrating more than 3,000 PhonePe group employees. 

It was the third step that stood out and stayed in memory. PhonePe’s investors, led by Walmart, had to pay about Rs