ASIA: Economic Survey 2023 says startups exploring reverse-flipping, suggests tax regimes like Singapore, UAE.

As published on moneycontrol.com, Tuesday 31 January, 2023.

The Economic Survey 2023 has said startups are exploring "reverse-flipping", or shifting their domicile back to India, a month after it emerged that such a shift by fintech unicorn PhonePe cost its investors around Rs 8,000 crore.

The survey also suggested measures like simplification of employee stock option (ESOP) taxes, capital gains tax regimes like those of Singapore, UAE and the Netherlands, and capital flow procedures akin to geographies like the US and Singapore to accelerate reverse-flipping.

Typically, “flipping” happens at the early stage of the startups, driven by commercial, taxation and personal preferences of founders and investors. Some companies decide to “flip” because the major market of their product is offshore.

Sometimes investor preferences like access to incubators drive the companies to “flip” as they insist on a particular domicile. Some companies prefer to domicile in countries where they are likely to access the capital market later for better valuations and ticket size.

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