Residential Status of a ‘COMPANY’ Based on POEM

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.... a company engaged in ABOI shall be presumed POEM outside India, if majority the board of directors (BOD) meetings are held outside India. • The POEM shall be considered to be in India, if • the Board of directors of the company are standing aside and not exercising their powers of management and • such powers are being exercised by either the holding company or any other person (s) resident in India. • Following Activity does not constitute a case of BoD of companies standing aside. • the Board of Directors (BOD) follows general and objective principles of global policy of the group laid down by the parent entity which may be in the field of • Pay roll functions, • Accounting, • Human resource (HR) functions, • IT infrastructure and network platforms, • Supply chain functions, • Routine banking operational procedures, and • not being specific to any entity or group of entities per se; • For the purpose of determining whether the company is engaged in active business outside India, • the avera....

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....hen that location is the place where head office is located. • Decentralized management - If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries) then the company's head office would be the location where these senior managers,-  (i) are primarily or predominantly based; or (ii) normally return to following travel to other locations; or (iii) meet when formulating or deciding key strategies and policies for the company as a whole. • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. • In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located. • In situations where the senior management is so decentralised that it is no....

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....ctivities of a company whereas the key management and commercial decision are concerned with broader strategic and policy decision.  • Example, a decision to open a major new manufacturing facility or to discontinue a major product line would be examples of key commercial decisions affecting the company's business as a whole. By contrast, decisions by the plant manager appointed by senior management to run that facility, concerning repairs and maintenance, the implementation of company-wide quality controls and human resources policies, would be examples of routine operational decisions.  • In certain situations it may happen that person responsible for operational decision is the same person who is responsible for the key management and commercial decision. • In such cases it will be necessary to distinguish the two type of decisions and thereafter assess the location where the key management and commercial decisions are taken. 3. Secondary Factor of determination of POEM • If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :- • (i) Pla....

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....beginning and at the end of the year and shall include persons, • who though not employed directly by the company, perform tasks similar to those performed by the employees. Payroll • This term include • the cost of salaries, wages, bonus and • all other employee compensation including related pension and social costs borne by the employer. 3. Determined POEM every year  • An entity may have more than one place of management, but it can have only one place of effective management at any point of time. • "Residence" is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. 4. Safeguard provision to ensure that POEM determination • The determination of POEM is to be based on • all relevant facts related to the management and control of the company, and • is not to be determined on the basis of isolated facts that by itself do not establish effective managem....