Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Whether Dubai company managed from India is a PE?

757 views

Save Share

Samir Desai

Software

23 Points Posted on 22 February 2023

I have a software-consulting company in the Dubai (100% owned by me). Apart from myself, there are no other employees of the company. And a simple tenancy contract for a coworking space in Dubai.

The software projects we do are all exports. That is the customers are not in UAE and also not in India.

I live in India (tax-resident), and manage the company from India. I sometimes hire contractors from India and other countries to help me with the work. At this point, at least 50% of the work is being performed by me. The Dubai company's revenue is way below the POEM threshold of 50 crores, it is just below 1 cr.

Does this imply that my Dubai company has a PE in India?

Replies (3)

Quick Summary

This discussion explores whether a Dubai-based software consulting company, wholly owned and managed by an individual residing in India, constitutes a Permanent Establishment (PE) in India. Despite the company's revenue being below the Place of Effective Management (POEM) threshold, the management activities conducted from India raise questions about its tax residency and potential taxability in India. The advice suggests that if the POEM is indeed in India, the company could be considered a resident, and its taxability would then depend on the Double Taxation Avoidance Agreement (DTAA) between India and Dubai.

shivam bhatia

132 Points Posted on 22 February 2023

As POEM is in India , it will be considered as resident company.

CA Sorav Gupta

Chartered Accountant

328 Points Posted on 22 February 2023

A company is considered as a resident in India during a previous year, if:

a) It is an Indian company, or

b) its place of effective management (POEM) during the year is in India

On the basis of the information furnished by you, we can conclude that the POEM of the company during the year is in India, therefore, the company will be a resident company.

Now, whether the Income will be taxable in India or not also depend on DTAA that India has signed with that company.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)