POEM Guidelines– Navigating the Labyrinth of Corporate Residency Complexities

Epsiode Duration:
90 minutes

Epsiode Background:

To recapitulate, as per Section 6(3) of the Income Tax Act, 1961, a company is said to be a resident in India in any previous year, if—(i) it is an Indian company; or (ii) its place of effective management, in that year, is in India. The Explanation to this clause states that, “For the purposes of this clause "place of effective management" means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.”

What shall the episode cover?

Against this backdrop, Taxsutra is glad to present a special episode on "POEM Guidelines– Navigating the Labyrinth of Corporate Residency Complexities” with Tax Stalwart Mr. P. V. Srinivasan (Corporate Advisor & Former Tax Head, Wipro). In this episode, the speaker has decoded key concepts & definitions vis-à-vis PoEM guidelines, in the light of plethora of judicial precedents, while also covering an array of topics which includes the following:

1. Glimpses into Circulars issued by CBDT

2. Meaning of the term “Active Business Outside India” (ABOI) & Other relevant definitions

3. Determination of POEM & Illustration of scenarios where there is no POEM taking into cognizance factors such as ownership, PE in India, director's residence, local management & support functions.

4. Look at issues for consideration such as :

1. What would be the impact of exclusion of services rendered between associated enterprises from the definition of “passive income” ?
2. Which TDS provisions would apply to Foreign companies that are resident in India as per POEM?
3. Can a foreign company which is a resident invoke/ avail DTAA benefits? Can a foreign company avail Foreign Tax Credit ?
4. Whether MAT provisions can be applied to foreign companies which are resident in India?
5. Can foreign companies carry forward and set-off business losses ?
6. Whether POEM can lead to Treaty Shopping ? Whether a situation can arise where POEM is used against the BEPS initiative of OECD?

5. Impact of MLI on POEM

6. COVID-19 and POEM