Clarification related to guidelines for establishing 'Place of Effective Management' (PoEM) in India

Last updated: 24 October 2017

Notice Date : 23 October 2017

Circular No 25 of 2017

F No 142/11/2015-TPL (Part-I)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
••••••

New Delhi, 23rd October, 2017

Subject: Clarification related to guidelines for establishing 'Piace of Effective Management' (PoEM) in India-reg.

The concept of 'Place of Effective Management' (PoEM) for deciding residency status of a company. other than an Indian company. was introduced in the Incometax Act. 1961 (the Act) which has become effective from 1,1 April. 2017, i.e .• Assessment Year 2017-18 onwards.

2. Guiding Principles for determination of PoEM of a company were issued on 241h January. 2017 vide Circular No 06 of 2017. Further. vide Circular No 08 of 2017 dated 23rd February, 2017. it has been clarified that the PoEM provisions shall not apply to a company having turnover or gross receipts of Rs 50 crore or less in a financial year.

3. Representations have been received from the stakeholders wherein concerns have been raised that as per the extant guidelines. PoEM may be triggered in cases of certain multinational companies with regional headquarter structure merely on the ground that certain employees having mUlti-country responsibility or oversight over the operations in other countries of the region are working from India. and consequently. their income from operations outside India may be taxed in India.

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