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September 15, 2021

Indian Tax Tribunal rules on re-domiciliation and its impact on treaty entitlement

Executive summary

The Mumbai Tax Tribunal has ruled in favor of non-Indian taxpayers that the re-domiciliation of a taxpayer does not affect treaty entitlement. The re-domiciled taxpayer was held to be entitled to the tax treaty benefits between India and the country of re-domiciliation.1 The Tribunal noted that re-domiciliation of the company by itself cannot lead to denial of treaty entitlements of the jurisdiction in which the company is re-domiciled. However, it also noted that the fact of re-domiciliation of the company could at best trigger a detailed examination on the re-domiciled company being actually fiscally domiciled in that jurisdiction.

This Alert summarizes the Tribunal’s decision and its implications for taxpayers.

Detailed discussion


The taxpayer was initially incorporated in the British Virgin Islands (BVI) as an “international business company.” Subsequently, the taxpayer re-domiciled itself in Mauritius and the Registrar of Companies issued a “certificate of incorporation by continuation” which was effective from the date of deregistration of the company in its initial place of incorporation.

The Registrar of Companies of the BVI issued a certificate stating that the taxpayer had discontinued its operations in the BVI on 30 June 1998. The taxpayer also obtained a tax residency certificate (TRC) from the Mauritian tax authority.

During the course of the appeals filed by the tax authorities on several grounds, the department representative raised the additional point of tax treaty eligibility mentioning that since the taxpayer was initially incorporated in BVI, the India-Mauritius tax treaty benefits could not be extended to the taxpayer.

There has been a lack of judicial guidance on the acceptability of the process of re-domiciliation and its impact on tax treaty benefits for the taxpayer. This ruling provides the much-needed guidance on this issue.

Indian Tribunal Ruling

The Tribunal’s considerations from its ruling are summarized as follows:

  • Corporate re-domiciliation, also referred to as “continuation,” is the process by which a company moves its “domicile” (or place of incorporation) from one jurisdiction to another by changing the country under whose laws it is registered or incorporated, while maintaining the same legal identity.
  • Re-domiciliation is a dynamic and constantly evolving concept and is generally implemented when an offshore entity faces a situation where the rules and regulations then prevailing in the current “domicile” are no longer aligned with the company’s purpose, or the prevailing rules and regulations restrict business prospects, which necessitates a transfer of the domicile by way of continuation from one place to another.
  • To effect a re-domiciliation, both the existing jurisdiction (where the company is currently registered) and the target jurisdiction (where the company is to be “continued”) need to be on the list of countries where corporate re-domiciliation is possible.
  • Re-domiciliation of offshore companies is not uncommon in offshore corporate holding structures. Re-domiciliation of the company by itself cannot lead to denial of treaty entitlements of the jurisdiction in which the company is re-domiciled, though, of course, the fact of re-domiciliation of the company could at best trigger a detailed examination on the re-domiciled company being actually fiscally domiciled in that jurisdiction.


The concept of re-domiciliation has been a recent development with no precedence in an Indian tax context. This Tribunal decision, in the context of re-domiciliation of a taxpayer from BVI to Mauritius, provides much-needed guidance on the manner in which Indian Tribunals are likely to interpret/ apply the re-domiciliation concept from a tax treaty perspective. The Tribunal recognized that the tax residency of the taxpayer could be changed through the legal process of re-domiciliation and such action by itself does not adversely impact treaty entitlement of the target jurisdiction.

It is recommended that multinational companies with Indian investments contemplating any re-domiciliation process should evaluate the impact of this favorable ruling based on their facts and applicable provisions in corporate laws of both the existing and target jurisdictions.


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (India), Mumbai

Ernst & Young LLP (India), Bangalore

Ernst & Young LLP (United States), Indian Tax Desk, New York

Ernst & Young LLP (United States), Indian Tax Desk, San Jose

Ernst & Young Solutions LLP, Indian Tax Desk, Singapore

Ernst & Young LLP (United Kingdom), Indian Tax Desk, London

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago



  1. See ADIT v. Asia Today Limited (ITA 4628-4629/Mum/2006). The decision was issued on 30 July 2021.

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