Ministry of Finance (Department of Revenue) has issued Guiding Principles for determination of Place of Effective Management (POEM) of a Company” target=”_blank”>Ministry of Finance (Department of Revenue) has issued Guiding Principles for determination of Place of Effective Management (POEM) of a CompanyMinistry of Finance (Department of Revenue) has issued Guiding Principles for determination of Place of Effective Management (POEM) of a Company. For the purposes of these guidelines, a company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income; and (i) less than 50% of its total assets are situated in India; and (ii) less than 50% of total number of employees are situated in India or are resident in India; and (iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure. In cases of companies other than those that are engaged in active business outside India, the determination of POEM would be a two stage process, namely:- (i) First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole. (ii) Second stage would be determination of place where these decisions are in fact being made. The guidelines also provide some of the guiding factors which may be taken into account for determining the POEM.
http://www.incometaxindia.gov.in/communications/circular/circular06_2017.pdf

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