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Double Tax Treaty UAE - India

Double Tax Treaty UAE - India

Updated on Wednesday 22nd May 2019

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The double tax treaty between UAE and India was signed in 1993. Thanks to an intensive economic trade of more than 20 billion dollars, the two countries have signed an arrangement based on the promotion of mutual economic relations. As a consequence of the tax convention, India and UAE have managed to avoid taxation of their legal entities and to successfully prevent tax evasion. Our law firm in Dubai offers professional legal counseling, tax planning and other legal services for investors conducting businesses between India and UAE.
 

The main provisions of the double tax treaty between UAE and India 

 
Although the personal income tax in Dubai is zero, in other emirates there are some tax decrees referring to the taxation of revenues and the companies must as well contribute with a corporate tax. The double taxation treaty makes sure that the income tax, the wealth tax and the corporate tax are not imposed twice on the enterprises which have already been taxed in India. The same measure is respected in India for the income tax, surtax, wealth tax and other similar taxes. The beneficiaries of the treaty are residents of India or UAE who have a permanent establishment in one of the two states. According to the convention, each state has the duty to inform the other one on the important changes which might take place in their taxation system.
 
Our Dubai lawyers remain at your disposal with further information and legal advice regarding taxation in the UAE.
 

Categories of income which enter the provisions of the double tax treaty

 
The tax convention between UAE and India provides that the local profit as well as individual revenues, such as salaries, pensions and director’s fees, should be taxed in the country where the commercial activity was performed. Another category of profits is that obtained from shipping and air transport which also enters the regulations of the tax convention. Interests, dividends and royalties follow as well the provisions of the double tax treaty UAE - India. In order to determine the country of residence for a legal entity, the state takes into consideration whether the business has one of the following establishments on its territory:
 
  • a place of management;
  • a branch;
  • an office;
  • a mine;
  • a factory or workshop. 

 

Incomes covered by DTT UAE – India

 
The following incomes are protected by the double taxation treaties signed between the UAE and India:
 
1. Personal services and revenues from these sources are covered by this treaty.
2. Revenues derived from shipping and air transportation are protected by the double tax treaty signed between the UAE and India.
3. The DTT also covers the interests, dividends and royalties registered in both countries.
4. Incomes from property alienation or immovable properties are protected by this DTT.
 
The legal aspects of the treaty can be completely explained by our attorneys in Dubai who can also provide assistance in opening companies in the UAE.
 

Are companies in the free trade zones protected by the treaties?

 
Yes, if you would like to open a company in Dubai’s free trade zones you can benefit from paying taxes twice, due to the double taxation agreements signed by the UAE with countries worldwide. In the same area of business advantages, we remind that foreign entrepreneurs have complete ownership and control in the firms established in Dubai. Dubai Multi Commodities Centre Free Zone, Dubai Internet City Free Zone, Dubai Airport Free Zone, Dubai Outsource Zone or Dubai Auto Zone are among the special free trade zones in Dubai where foreigners can easily set up their companies.
 

Permanent establishments in Dubai

 
Companies with permanent establishments like factories, offices, branches, workshops, or any other work places in Dubai are mentioned by the provisions of the double taxation agreement signed by UAE and India. You can easily talk to our team of lawyers in Dubai and find out more about the double taxation conventions signed by UAE with countries worldwide, including India.
 

DTT provisions – what are the most important ones?

 
Just like most of the conventions signed by UAE, the one established with India covers tax reductions for capital gains, for varied several foreign investments agreed, and several elimination methods as accepted by the states involved in the treaties.
 

Making investments in Dubai

 
Dubai is a very appreciated business destination that offers a multitude of possibilities, plus a great environment for development. There are more than 40 free trade zones in Dubai which offer business stability and complete ownership in the firm. The taxation regime is still appealing, even if the excise tax and the VAT were introduced at the beginning of 2018. The business confidentiality and having no restrictions in establishing more than just one activity in Dubai make international investors decide fast on company development in this city. Moreover, it is a known fact that the infrastructure plays a major role when it comes to making a business in a foreign country. Dubai is an important financial center that offers the needed business support for foreign investors, where the infrastructure is well-developed in any sector. Here are a few aspects to consider when wanting to implement your business in Dubai, regardless of the chosen field:
 
  1. The skilled local workforce is in the attention of most of the foreign investors in Dubai.
  2. The import and export sector benefits from a series of advantages and foreign companies are exempt from tax duties.
  3. Entrepreneurs in Dubai can easily connect with countries worldwide when having a business in the UAE.
  4. It is quite easy to set up a branch or a subsidiary in Dubai.
  5. The incorporation process in Dubai is not subject to complex formalities and entrepreneurs can easily set up their business.
  6. The tax benefits are huge in Dubai, and entrepreneurs from abroad can enjoy tax exemptions like no corporate or income taxes.
  7. The positive trends of the real estate sector in Dubai attract different foreign businesses every year.
  8. Dubai is an important touristic destination which offers plenty of opportunities in this area.
  9. Numerous innovative projects are easily implemented by foreign entrepreneurs.
  10. The double taxation treaties signed by UAE with countries worldwide are meant to avoid the double taxation on incomes.
 
A clear picture of the business environment and the taxation structure in the UAE can be offered by a team of consultants in Dubai at any time. Furthermore, numerous international entrepreneurs are interested in asking for legal advice when it comes to business formation and tax compliance, especially in an Arabic country like UAE where several conditions might be imposed. Foreign entrepreneurs who want to know more about the double taxation treaty signed by UAE and India should talk to our team of advisor at any time. They can also provide support in business formation.
 
Whether you have a business in the UAE you might consider employing professional legal advice from our attorneys in Dubai. Don’t hesitate to contact us for complete legal assistance and tax planning in the UAE.