Understanding the PoEM effect

The PoEM tests involve assessing evidence on where the effective management is located

The test of Place of Effective Management (PoEM) of an offshore company came into effect on April 1 last year. However, the provisions of the guiding principles came in the last quarter of 2016-17. This makes it challenging for companies whose management, operational structures and functioning are not aligned with the new rules. “The greatest impact shall be upon entities set up outside India, shell or otherwise, by Indian residents,” says Pallav Pradyumn Narang of chartered accountancy firm Arkay & Arkay. 

Tax experts say business groups that have to restructure their operations might face challenges in passing the PoEM tests if