• NR company - clarification

I am a indian citizen and I plan to incorporate a company this year in UAE which will cater to service requirements of companies in Europe . Nature of business will be export of services from UAE . It will be a new company . We will be provided operational support from a UAE based company and will share revenue  ( under a Joint marketing agreement ) with this company in exchange of operation support however I will be 100 % shareholder of this company but all business activities will be in UAE  .. I will be traveling to UAE or other parts for meeting or when important decisions are to be made .

The laws of Free Zone where we intend to incorporate company don’t require us to have board meetings or constitute a board .We only have to register ourselves for VAT 

Will this company have to pay any taxes in India as I am a indian citizen
Asked 26 days ago in Income Tax from Chandigarh, Chandigarh
As per Indian income tax law residential status is taken into account instead of citizenship. Your being Indian citizen does not effect tax liability on the company run by you. Company in UAE will be considered as foreign company in India. Foreign company will be considered as resident only when the place of effective management is in India i.e. controlling and decisions of opertaions taken from India. As you said all important decisions taken in UAE therefore there is no income tax liability on the company in India.
Vivek Kumar Arora
CA, Delhi
695 Answers
7 Consultations

5.0 on 5.0

Hi,

For the company, there will be no tax liability in India since the operations and management are both based out of India.

Hope that clarifies.

Regards,
Nikhil.
Nikhil Khanna
CA, Mumbai
566 Answers
3 Consultations

5.0 on 5.0

HI,

Just because you are an Indian citizen, the company will not be liable to pay taxes in india.

Any tax liability with respect to Indian tax laws will fall upon the foreign company only if any of the following happens:

1. Income is arising in India.
2. Any sale or purchase of investments have been made by the company in India.
3. Any business activity conducted in India.
4. This company is having any PE ( permanent establishment) in India.

In your case, as of now, it does not seem to do any business in India, hence no tax liabilities in india.

Thanks
Damini 
Damini Agarwal
CA, Bengaluru
138 Answers
8 Consultations

5.0 on 5.0

The taxation of any entity depends upon its own residential status.

However, in your case, as you are saying that you will be having the 100% shareholding, then it will create POEM. But the same can be saved if you are able to substantiate that the 100% decision making is happening abroad.
Damini Agarwal
CA, Bengaluru
138 Answers
8 Consultations

5.0 on 5.0

Company will not be liable to tax in India unless company will generate income in india. The only thing relevant is place from where controls of operations and decisions will take place. Shareholding is irrelevant. 

You still hold board meetings in UAE to prove it in India in future.

Vivek Kumar Arora
CA, Delhi
695 Answers
7 Consultations

5.0 on 5.0

Yes concept of POEM is applicable to companies having turnover of 50 crore or more. You should be happy as by no means company can be resident in India if it is incoporated outside India.
Vivek Kumar Arora
CA, Delhi
695 Answers
7 Consultations

5.0 on 5.0

Since the operations are based out of India and important decisions are also being taken out of India, so there will be no tax liability in india.
Nikhil Khanna
CA, Mumbai
566 Answers
3 Consultations

5.0 on 5.0

Since the operations are based out of India and important decisions are also being taken out of India, so there will be no tax liability in india.
Nikhil Khanna
CA, Mumbai
566 Answers
3 Consultations

5.0 on 5.0

Your UAE company will not be liable to pay taxes in India because control and management is in UAE. Further, POEM is not applicable for companies having turnover less than 5 Cr. 

Please feel free to call/ revert in case you need more clarity.

Thanks and regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2788 Answers
114 Consultations

5.0 on 5.0

You will have to check whether your PE is created in Europe or not. Since, you will be performing major marketing decisions in Europe, there could be a possibility of PE being created in Europe. Just check that part
Abhishek Dugar
CA, Mumbai
2788 Answers
114 Consultations

5.0 on 5.0

1. Even if POEM is not applicable, with the Advent of GAAR and BEPS, the on us is more on you to prove that company in UAE has a substance and it's not mere a puppet of it's holding company/ person. To prove this,it's better to constitue a board.

2. You just need to appoint two directors in your company.

Please feel free to call/ revert in case you need more clarity

Thanks and regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2788 Answers
114 Consultations

5.0 on 5.0

1. Yes. It is better to constitute a board and hold board meetings.
Nikhil Khanna
CA, Mumbai
566 Answers
3 Consultations

5.0 on 5.0

Dear Sir,

When POEM is not applicable to you then your company would be deemed as non-resident irrespective of the place of the board meetings. As your co. is incorporated in UAE, you need to check the concept of OPC board meetings requirement as per UAE laws only.
Vivek Kumar Arora
CA, Delhi
695 Answers
7 Consultations

5.0 on 5.0

it seems your query is been answered .In case of further clarification please follow up.
Swati Agrawal
CA, Indore
245 Answers

5.0 on 5.0

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