Clarity still eludes PoEM coverage

PoEM is an internationally recognised test used to determine a foreign company's residential status

The determination of the Place of Effective Management (PoEM) of a company has a few loose ends, despite the Central Board of Direct Taxes (CBDT) giving the final guidelines on the matter last month.

“The circular has listed multiple factors for determining the PoEM, without defining the hierarchy and the weight of each factor. This is likely to make the exercise subjective and uncertain,” said Deepa Dalal, partner, transaction tax, EY India.

The guidelines say the PoEM is to be determined on a factual and yearly basis. For those having an “Active Business Outside India” (ABOI) or operations outside India,