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What is the significance of the Place of Effective Management (POEM) rule?
What is the significance of the Place of Effective Management (POEM) rule?
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POEM determines the residency status of a company based on where key management and commercial decisions are made, impacting its global tax obligations.
The Finance Act 2015 introduced the concept of Place of Effective Management (PoEM) to determine the residential status of foreign companies in India. If a company’s PoEM is in India, it is treated as an Indian resident, subjecting its global income to taxation in India.