India’s POEM – Further clarifications
The Finance Act, 2016 brought in an important amendment. As per this, some foreign companies could be deemed to have their Place of Effective Management (“POEM”) in India and as a consequence, would be deemed to be an Indian tax resident having to pay tax on global income. A POEM for a foreign company would mean a dual tax residency, one in its home country and the other in India. By definition in the Indian tax law, POEM “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”. The POEM rules apply from the Financial Year (“FY”) 2016-17.