Place of Effective Management determines corporate residence and can subject a foreign company's global income to Indian taxation.
POEM determines corporate residence by locating where key management and commercial decisions for the business as a whole are, in substance, made. CBDT guidance prescribes a fact specific, annual, substance over form test: first assess Active Business Outside India via four objective metrics averaged over three years; if ABOI exists, majority of board meetings abroad tends to indicate POEM outside India unless de facto control is exercised from India; if not ABOI, identify who makes key decisions and where they are made using primary and secondary factors. Administrative approvals and transition rules govern tax computation, depreciation, loss carryovers, accounting periods and TDS. (AI Summary)