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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM68476
Volume:
10 |
10 |
Oct 2026
Pages:
1-3
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
School of Law
SRM University of Science and Technology
Cross-border business has made corporate nationality and tax residence more complex than the simple question of where a company is incorporated. A company may be registered in one jurisdiction, managed from another, owned by investors from several countries, and earn income across many markets. This article distinguishes corporate nationality from fiscal residence and examines the Indian legal framework, including the separate legal personality of companies, the place of effective management test, tax treaties, and leading judicial decisions. It argues that incorporation remains a useful legal connecting factor, while substantive management and economic activity are relevant to tax residence and anti-avoidance analysis. The article recommends clearer evidence-based guidance, consistent treaty interpretation, and proportionate compliance rules to reduce uncertainty without discouraging legitimate foreign investment.
KEYWORDS
Corporate nationality and corporate residence are related but distinct legal concepts. Incorporation provides a stable basis for identifying a company’s legal framework, whereas tax residence may depend on the substance and location of strategic management. Indian law’s POEM test, now retained in the Income-tax Act, 2025, seeks to align tax residence with actual decision-making while the judicial decisions discussed above underline the importance of separate corporate personality, statutory interpretation and treaty context. The challenge is not to choose form over substance, or substance over form in every case, but to apply the correct legal test to reliable evidence. Clearer guidance, consistent treaty administration and proportionate compliance can reduce disputes and support both revenue protection and legitimate cross-border investment.
[1] State Trading Corporation of India Ltd. v. Commercial Tax Officer, AIR 1963 SC 1811. [2] Salomon v. A. Salomon & Co. Ltd., [1897] AC 22 (HL). [3] Income-tax Act, 1961, § 6(3), as amended by the Finance Act, 2015 and Finance Act, 2016. [4] Central Board of Direct Taxes, Circular No. 6 of 2017, Guiding Principles for Determination of Place of Effective Management (POEM) of a Company (24 Jan. 2017). [5] Income-tax Act, 2025, § 6 (effective 1 Apr. 2026). [6] Union of India v. Azadi Bachao Andolan, (2004) 10 SCC 1. [7] Vodafone International Holdings B.V. v. Union of India, (2012) 6 SCC 613.
Publication Date
10/29/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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Conflict of Interest
The authors declare no conflict of interest related to this research work.
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