Truecaller pays the most tax in Sweden even though they earn 70 percent from India
Last year, Stockholm-based caller ID and spam detection app Truecaller totaled SEK 1.12 billion (approximately Rs 830 crore at the exchange rate as of 3 October 2022), of which India contributed SEK 787 million (approximately Rs 578 crore), accounting for nearly 70 percent of the company’s total revenue, according to the company’s consolidated financial report for CY21 submitted to Nasdaq Stockholm. Moreover, according to the company’s Indian subsidiary’s financial statements to the Registrar of Companies (RoC), its India operations reported annual revenue of just Rs 130 crore in FY21. Which means there is a gap of around Rs 400 million in the company’s revenue reported in India compared to its India numbers reported in Sweden. This despite the fact that Sweden follows a calendar year reporting format and Indian companies follow the financial year timeline. When asked about it, the company’s spokesperson said: “The annual report numbers are the official numbers used by us as a listed company. However, you raise a valid question about the difference in numbers. The reason for this difference in the annual reports is due to the accounting treatment/rules at consolidation of figures from various subsidiaries in the group.”
While the company globally reported a profit of SEK 856 million (roughly Rs 630 crore) in CY21, its Indian subsidiary, Truecaller International Limited Liability Partnership, reported a loss of Rs 11 crore in FY21. “We have been profitable for many years now. Philosophically, we wanted to be the company that makes money from very transparent sources. We have ads, premium subscriptions and Truecaller for Business,” said Rishit Jhunjhunwala, Chief Product Officer and CEO of Truecaller India. We wanted to remain profitable, he adds, so that our users don’t think that “one day these guys are going to get desperate and sell our data”.
Recently, the company’s shares had crashed after US-based investigative financial research group Viceroy Research said in a report that global privacy and data protection laws would soon render Truecaller’s business model redundant. It also suggested the company is “circumventing regulations” and/or avoiding taxes through “uncreative loopholes”, which will inevitably be cut.
The Viceroy report said: “When the tax man comes knocking, Truecaller is a loud and proud Swedish company. It invoices almost exclusively from Sweden from advertising clients/agents despite having virtually all of its operations in India.” The report further states that they believe that Truecaller has failed to follow transfer pricing principles and is avoiding higher tax rates in India. It then adds that “It pays tax almost exclusively in Sweden. This is despite the fact that all process risks and operations are carried out in India.”
Meanwhile, Truecaller’s Indian subsidiary in its audited report for FY21 stated that “LLP is conducting a transfer pricing study as required under the transfer pricing rules under the IT Act to determine whether the transactions entered into during the year ended March 31, 2021 with the associated companies was carried out at [an] “arm’s length price”.
Globally, the free app earns nearly 84 percent of its revenue from in-app advertising. “Truecaller ads have been a gateway to helping brands reach millions of users in a short amount of time. It’s unobtrusive and will never take over your phone screen,” said Alan Mamedi, CEO and co-founder of the company about the app’s advertising business. revenue stream are its Gold and Premium subscriptions, priced at Rs 4,999 per year and Rs 549 per year respectively in India.Premium subscriptions allow users to use the app without ads and unlock features like advanced spam blocking and contact requests among others, while a Gold subscription gives them all this and make them eligible for a gold badge and priority services. Last year, the company also entered its third revenue stream, ‘Truecaller for Business’, to help businesses connect with their customers more reliably and efficiently. For a monthly call volume of 50,000 the app charges businesses between Rs 15,000-19,500 per month depending on their requirements.
“The solution enables businesses to verify their identity by adding the correct name, brand logo and a green caller ID. This is especially important as many fraudsters are now trying to imitate brands. There is great potential for this, not only in India but in all markets where there is a need for businesses to create a trusted connection with potential and existing customers,” says Mamedi.
Currently, Truecaller for Business has over 1,000 active business customers in 33 countries. “We see traction across categories of businesses with use cases around service, support and fulfillment, ridesharing, logistics and delivery, marketing, sales, security and fraud management,” he adds. Business owners can create their profiles with information such as address, website, email and opening hours – just like Google Maps does. It is also revamping its Truecaller Priority service to distinguish between valid business and spam calls. The company identifies calls based on colors. Blue is for default, red means spam/fraud/harassment while green is a call from a verified company and purple is a priority call that has use cases for companies operating in e-commerce, taxi hailing and other areas that need a user’s immediate attention.
Read also: New Truecaller app for iOS launched: Get 10x better caller ID, spam detection and more