30+ years of combined expertise in complex Indian taxation and compliance.
Discuss your unique tax situation with our senior partners. No obligation.
30+ years of combined expertise in complex Indian taxation and compliance.
Place of Effective Management (POEM) rules can instantly reclassify a foreign subsidiary as an Indian tax resident, taxing its global income at 40%. We audit board substance, mandate operational protocols, and build defensible shields against residency disputes.
Ideal for: Indian Promoters with UAE/Singapore holding entities, Outbound Tech Startups, and Multinational JVs.
Indian assessing officers routinely deploy "substance over form" to disregard offshore holding unities. Relying solely on a certificate of incorporation or local nominee directors is no longer a defense against global taxation.
If the Indian parent company or its directors are calling the shots via email or WhatsApp directing the foreign subsidiary's actions, the true decision-making "Place" is India.
Risk: Decisive management control traces back to the Indian IP address.
Post-COVID, offshore board meetings shifted online. If controlling directors join the meeting from Mumbai, the legal locus of that "offshore" board meeting is India.
Risk: Physical locus of the directors determines the locus of the board.
If the foreign treasury, banking authorities, or capital expenditure approvals require sign-off from the Indian parent, the offshore entity lacks commercial independence.
Risk: Lack of localized operational funding and control.
We dissect board minutes, executive travel logs, email authorizations, and banking architectures to identify latent POEM triggers before the assessing officer does.
Designing localized governance. We draft the protocols for physical meetings, ensure the local directors are adequately qualified, and enforce pre-read documentation rules.
Testing the "Active Business Outside India" parameters mathematically to secure the legal presumption against Indian residency.
When notices are served, we build the factual and evidentiary matrix proving that decisive control was fundamentally exercised in the foreign jurisdiction.
"The sheer threat of our UAE entity being taxed as an Indian resident would have effectively bankrupted our holding structure. Sami's team stepped in, organized our chaotic historical documentation into a pristine, impenetrable defense file, and completely shut down the assessing officer's POEM allegations."
— Managing Director, Dubai Investment Group
Understanding the transition from paper directors to substantive offshore governance.
POEM is triggered when 'key management and commercial decisions' in substance are made in India.
The Income Tax Department looks beyond paper boards to identify the real decision-makers. Common triggers include:
Turnover threshold: POEM provisions apply only to foreign companies with an annual turnover exceeding ₹50 Crores.
The consequences are catastrophic for international tech and holding structures.
Global Taxation
The foreign entity's entire global income becomes taxable in India at the 40% foreign corporate tax rate (plus surcharge).
Compliance Nightmare
The entity must now file Indian tax returns, withhold Indian TDS on all its foreign payments, and adhere to Indian transfer pricing rules.
ABOI provides a 'safe harbor' presumption that POEM is outside India.
To qualify for ABOI, the foreign company MUST meet ALL four conditions:
Even if you meet ABOI, the majority of board meetings still must be held physically outside India.
A single email from an Indian promoter could trigger global taxation. Let us stress-test your offshore board protocols against aggressive Indian POEM standards before a notice is issued.