TaxTonic #30: POEM - Rigours of Residency Rule!

Episode Duration:

90 Minutes

Episode Background:
'TaxTonic', a 'subscriber only' thought leadership series, is Taxsutra's endeavour to consistently deliver top notch technical content to it's readers. The labyrinth of tax rulings on convoluted transactions keeps the world of taxation unpredictable and ever-evolving. This series will feature engrossing presentations, incisive analyses and a deep-dive by the tax experts on burning issues & controversies. So, gear up for a 'tonic' to chisel your tax mind and challenge your wit.

Speaker:

Mr. Ajay Rotti (Founder & CEO, Tax Compaas)

Moderator:
Mr. Sachin Sastakar (Chartered Accountant)

What shall the episode cover?

Not long ago, Section 6(3) decided the residential status of a foreign company in India based on the situs of control and management of its affairs. The Finance Act, 2015 inserted the Place of Effective Management (POEM) test for determining the residential status which applies AY 2017-18 onwards. Additionally, Base Erosion and Profit Shifting (BEPS) Action Plan, on entities enjoying dual residency, made treaty benefit even more stringent by providing for reference to Competent Authorities (CA) for resolving the tie-breaker. To streamline the practical challenges surrounding POEM of a company incorporated outside India, Section 115JH has been incorporated in the Income Tax Act.

Taxsutra presents the next episode of TaxTonic to decipher the nuances of changes made in Section 6 read with Section 115JH of Income Tax Act to understand the complexities surrounding the subject. The episode primarily covers:

1. Analysis and challenges in the implementation of POEM Guidelines.

2. DTAA and Tie Breaker Test.

3. Impact of BEPS Action Plan for Entities with Dual Residency.

4. Section 115JH implications.

5. Judicial pronouncements applicable to POEM.