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  • CBDT - POEM Guidelines Press Release - January 2017

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    bharath289
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    The Central Board of Direct Taxes issued guiding principles for determining the place of effective management (POEM) of a company. POEM determines the residential status of a company for tax purposes and became effective from assessment year 2017-18. The guidelines provide an active business outside India test to exclude companies engaged in real business abroad. The intent is to target shell companies controlled in India but retaining income abroad, not tax foreign companies solely due to an Indian business connection. Administrative safeguards require approval from senior tax officials before investigating a company's POEM. The guidelines do not apply to companies with annual revenue less than 50 crore rupees. Illustrations are provided to clarify when POEM would or would not apply.

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    CBDT - POEM Guidelines Press Release - January 2017

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    The Central Board of Direct Taxes issued guiding principles for determining the place of effective management (POEM) of a company. POEM determines the residential status of a company for tax purposes and became effective from assessment year 2017-18. The guidelines provide an active business outside India test to exclude companies engaged in real business abroad. The intent is to target shell companies controlled in India but retaining income abroad, not tax foreign companies solely due to an Indian business connection. Administrative safeguards require approval from senior tax officials before investigating a company's POEM. The guidelines do not apply to companies with annual revenue less than 50 crore rupees. Illustrations are provided to clarify when POEM would or would not apply.

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    45 vues1 page

    CBDT - POEM Guidelines Press Release - January 2017

    Transféré par

    bharath289
    The Central Board of Direct Taxes issued guiding principles for determining the place of effective management (POEM) of a company. POEM determines the residential status of a company for tax purposes and became effective from assessment year 2017-18. The guidelines provide an active business outside India test to exclude companies engaged in real business abroad. The intent is to target shell companies controlled in India but retaining income abroad, not tax foreign companies solely due to an Indian business connection. Administrative safeguards require approval from senior tax officials before investigating a company's POEM. The guidelines do not apply to companies with annual revenue less than 50 crore rupees. Illustrations are provided to clarify when POEM would or would not apply.

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    Signaler comme contenu inapproprié
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    Government of India

    Ministry of Finance
    Department of Revenue
    Central Board of Direct Taxes

    New Delhi, 24th January, 2017.

    Press Release

    CBDT issues Guiding Principles for determination of Place of Effective Management


    (POEM) of a Company

    The concept of POEM for deciding the residential status of a company was introduced
    by the Finance Act, 2015. It is effective from 01.04.2016 and accordingly shall apply from
    assessment year 2017-18 onwards. The guidelines for determining the POEM has been
    uploaded on website of the Income-tax Department (www.incometaxindia.gov.in). These
    guidelines of POEM have been finalised, after placing draft guidelines in public domain for
    seeking comments from stakeholders and general public, and with extensive consultations
    thereafter.

    The final guidelines on POEM contain some unique features. Active Business Outside
    India (ABOI) test has been provided, so as not to cover companies outside India which are
    engaged in active business. The intent is not to target Indian Multi Nationals which are engaged
    in business activity outside India. The intent is to target shell companies and companies which
    are created for retaining income outside India although real control and management of affairs
    is located in India. It is emphasised that these guidelines are not intended to cover foreign
    companies or to tax their global income, merely on the ground of presence of Permanent
    Establishment or Business connection in India.

    Adequate administrative safeguards have been incorporated in the guidelines by


    mandating that the Assessing officer (AO), before initiating inquiry for POEM in a case of a
    taxpayer, will seek approval from Principal Commissioner of Income Tax/ Commissioner of
    Income-tax. The AO shall also obtain approval from Collegium of Principal Commissioners of
    Income-tax before holding that POEM of a non-resident company is in India.

    It has been further decided that the POEM guidelines shall not apply to companies
    having turnover or gross receipts of Rs. Fifty crore or less in a financial year.

    The guidelines also contain illustrations to clarify the situations whether POEM shall or
    shall not apply.

    (Meenakshi J. Goswami)
    Commissioner of Income Tax
    (Media and Technical Policy)
    Official Spokesperson, CBDT.

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