Newsflash - Draft Guiding Principles for Determination of 'Place of Effective Management' of a Company

Draft guiding principles for determination of place of effective management of a company; place of effective management, foreign company will be treated as resident in India if its place of effective management; Location of Head Office; Use of modern technology in conducting meeting.

The Finance Act, 2015 had modified the residency criteria for a foreign company providing that it would be resident in India in any previous year, if its Place of Effective Management (‘POEM’) in that year is in India.

Recently the CBDT has issued a set of guiding principles for determination of POEM for comments from stakeholders and general public. Further, the CBDT has clarified that the above principles for determining the POEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered.

In this newsflash, the above draft guidelines as issued by the CBDT has been summarized.

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