This journey assumes
- The Indian parent is a company incorporated in India, not a bank, NBFC or insurer, and its accounts are not classified as non-performing.
- The UAE company will distribute goods manufactured by the Indian parent and possibly hold shares in other GCC or African group companies; it will not carry on regulated financial services.
- The investment is within the automatic route (within 400% of net worth and below USD 1 billion in the financial year).
- No part of the UAE structure will invest back into India at the outset.
- Rules are stated as at 18-19 October 2026; free zone examples are illustrative and each zone's own regulations must be checked.
If any assumption is wrong for your business, the conclusions change. Ask WONE Global to re-run the analysis with your facts.
Both sides of the border, issue by issue
Each row is one part of the work. The left and right columns show what each country's rules require, so you can see where one side's decision constrains the other.
Moving money out of India and into a UAE company
The Indian parent's investment is an overseas direct investment under India's FEMA overseas investment framework, which limits how much can be committed, requires a genuine business purpose and imposes reporting through one designated bank. On the UAE side, most activities can be 100% foreign-owned on the mainland, so ownership is rarely the constraint; the Indian rules usually are.
- The UAE subsidiary is an overseas direct investment governed by the RBI Master Direction - Overseas Investment (updated as on 1 April 2026), read with the Overseas Investment Rules and Regulations, 2022. Most manufacturing companies can invest under the automatic route without prior RBI approval.1
- The UAE company must carry on a bona fide business activity, meaning one lawful in both India and the UAE. A regional sales and distribution company normally meets this; a shell holding company with no activity needs more care.23
- The Indian company's total financial commitment to all its overseas entities (equity, loans and guarantees) must stay within 400% of its net worth on its last audited balance sheet, and anything above USD 1 billion in a financial year needs prior RBI approval.45
- If the UAE company, or anything below it, invests back into India, the structure must not exceed two layers of subsidiaries. This matters if the hub is later used to hold Indian or other group investments.6
- All transactions run through one designated AD bank: Form FC is filed to obtain a UIN on or before the first remittance, and an Annual Performance Report is due by 31 December each year. Late filings can be regularised for a fee, but repeated delays draw scrutiny.78910
- If any Indian group account is a non-performing asset or the company is under investigation, an NOC from the lender or agency is needed before investing. Share issue and transfer prices must follow the OI Rules pricing requirement as applied by the AD bank.1112
- Since 2021 the UAE Commercial Companies Law allows 100% foreign ownership of mainland companies; the old majority-Emirati shareholder requirement has gone.13
- Activities of strategic impact identified by the Cabinet can still carry ownership limits or extra licensing conditions. Ordinary trading and distribution of manufactured goods is not usually in this category, but the activity list should be checked before applying.14
- Free zones run their own ownership and licensing regimes and have long allowed full foreign ownership; federal law no longer requires mainland branches of foreign companies to appoint a UAE national service agent for most activities, although some licensing authorities still ask for one.15
Choosing the UAE vehicle and how the Indian parent holds it
The real choice is between a mainland LLC, a free-zone company and a branch, and it turns on where customers are, how goods move and whether the 0% free-zone tax rate is achievable. For the Indian parent, a subsidiary is an overseas direct investment with its own reporting, while a branch is part of the Indian company and its UAE profits are Indian profits.
- A UAE subsidiary is reported and limited under the overseas investment rules (Form FC, APR, net-worth limit). Its profits are taxed in India only when paid up as dividends or through transfer pricing adjustments.48916
- A UAE branch is not an overseas direct investment; the Indian company may fund its own overseas office for normal business operations, but the branch cannot be used to make overseas investments. Branch profits form part of the Indian company's worldwide income.1716
- A holding role for other GCC or African entities sits more naturally in a subsidiary, but each further layer is itself reportable, and layering is restricted where the structure also invests back into India.69
- Mainland companies take one of the listed legal forms, usually an LLC, and are licensed by the emirate's economic department (DET in Dubai, ADDED in Abu Dhabi). A mainland licence is the straightforward route to selling to customers anywhere in the UAE.1819
- Free-zone companies are licensed by the free zone authority. They are attractive for regional re-export, holding and the possible 0% corporate tax rate, but selling into the UAE mainland is not a qualifying activity unless it is distribution from a Designated Zone, and mainland sales can break the de minimis limit.192021
- A mainland branch of the Indian company is possible. Federal law no longer requires a UAE national service agent for most activities, though the licensing authority may still ask for one. The branch needs Ministry of Economy approval and leaves the Indian company directly exposed to UAE liabilities.1522
- Financial free zones such as DIFC and ADGM are a different model from trading zones such as JAFZA or DMCC; a holding or treasury role there should be checked against that zone's own regulations, and regulated financial activity raises the Indian three-year profit test for financial services investments.23
Tax on both sides
The UAE company pays 9% corporate tax on profits above AED 375,000, or 0% on qualifying income if it is a Qualifying Free Zone Person, and charges 5% VAT where it applies. India taxes the parent's worldwide income, including dividends from the UAE, and could tax the UAE company itself if it is in substance managed from India. Transfer pricing applies on both sides to every parent-subsidiary transaction.
- From 1 April 2026 Indian income tax is governed by the Income-tax Act, 2025. An Indian company is taxed on its worldwide income, so dividends received from the UAE company are taxable in India; relief for any foreign tax is through the treaty or foreign tax credit rules.2416
- The UAE levies no withholding tax on dividends, so the treaty cap of 10% on source-state dividend tax is of little practical effect on UAE-to-India dividends; the Indian tax on the dividend is the main cost of repatriation.2526
- If the UAE company's key management and commercial decisions are in substance taken in India, it can become Indian tax resident under the place of effective management test and be taxed in India on its worldwide income. Board composition, meeting location and who signs major contracts matter.2728
- Sales of goods from the Indian factory to the UAE company, any management or service fees and guarantees are international transactions that must be priced at arm's length and documented, with an accountant's report filed before the return.29
- UAE corporate tax is 0% on taxable income up to AED 375,000 and 9% above that, for financial years from June 2023. Every taxable person, including free-zone companies, must register and file within nine months of year end.3031
- A Qualifying Free Zone Person pays 0% on qualifying income, but only with real substance in the free zone, audited IFRS accounts, transfer pricing compliance and non-qualifying revenue below the lower of 5% or AED 5 million. Failing a condition means 9% on everything for five years.203233
- For a distribution hub, the qualifying activity is distribution of goods in or from a Designated Zone with goods imported through that zone. A free zone that is not a Designated Zone does not give this benefit.21
- Related-party pricing with the Indian parent must be at arm's length under UAE rules too, with a master and local file where revenue reaches AED 200 million or the group reaches AED 3.15 billion.3435
- The 15% top-up tax applies only if the Indian group's consolidated revenue is EUR 750 million or more; Small Business Relief is not available to a Qualifying Free Zone Person.3637
- VAT is charged at 5%, with mandatory registration above AED 375,000 of taxable supplies; certain goods transactions between Designated Zone companies may fall outside VAT.38
Moving goods: CEPA, origin and customs
The India-UAE CEPA has been in force since May 2022 and reduces or removes UAE duty on most products, provided the goods meet the CEPA rules of origin and carry a valid certificate. Whether duty is paid at all depends on where goods land: goods held in a free zone are treated differently from goods released into the UAE mainland.
- Preferential certificates of origin for CEPA shipments are issued through DGFT's common digital platform by designated agencies; without a valid certificate the UAE importer pays the standard duty.3940
- The Indian manufacturer must be able to show its products meet the CEPA product-specific rules of origin; check by HS code before pricing contracts on the preferential rate.41
- The CEPA entered into force on 1 May 2022; preferential rates by HS code can be checked on the UAE Market Access Dashboard.4241
- Outside the CEPA, UAE customs duty is generally 5% of the CIF value under the GCC customs framework. Goods re-exported to other GCC states move within the GCC Customs Union; re-exports to Africa depend on the destination's own tariff and any agreements it has.40
Staff, visas and social security
The UAE company sponsors work permits and residence visas for its staff; which authority handles them depends on whether it is a mainland or free-zone company. Indian staff sent to the UAE need checking on both sides: Indian tax residence, whether Emiratisation targets apply, and social security, several of which could not be source-checked.
- Check the Indian tax residence of each employee sent to the UAE for each tax year under the Income-tax Act, 2025. The UAE has no personal income tax on salaries, which can matter for Indian residence rules that look at whether a citizen is liable to tax elsewhere; this research could not confirm the current provisions on the official site.24
- Confirm whether India has a social security agreement with the UAE before assuming Indian provident fund contributions can stop or continue for deputed staff; the EPFO page listing agreements could not yet be checked.
- Salary costs recharged between the Indian parent and the UAE company for seconded staff are related-party transactions that need arm's length support on both sides.2934
- The UAE company sponsors staff work permits and residence visas. Which authority processes them depends on whether it is a mainland company or a free-zone company licensed by the free zone authority; confirm the process with that authority.19
- Emiratisation targets for private-sector employers above certain sizes are set by the Ministry of Human Resources and Emiratisation and apply to mainland employers; whether and how they apply to the chosen vehicle must be confirmed, as the official page could not yet be checked.
- UAE payroll carries no personal income tax, but end-of-service, pension and insurance obligations apply and differ for UAE nationals and expatriates; these were not source-checked.
Bank accounts, currency and moving money back
The UAE company needs a corporate account with a UAE bank, which will run full KYC on the Indian parent and its owners. On the Indian side, the investment and every later flow (loans, dividends, export proceeds) runs through the designated AD bank, with time limits for bringing money back.
- The equity remittance and any loan to the UAE company go through the designated AD bank after the UIN is issued.78
- Dividends, interest and other dues from the UAE company must be repatriated to India within 90 days of falling due; dividends cannot simply be left in the UAE indefinitely once declared.43
- UAE banks onboard new companies only after full KYC on the company, the Indian parent, directors and ultimate beneficial owners; expect to provide the trade licence, constitutional documents, group structure and evidence of genuine business. Specific Central Bank requirements were not source-checked.
- There is no UAE withholding tax on dividends paid to the Indian parent, so repatriation cost is driven by Indian tax and banking formalities rather than UAE deductions.2543
- The Indian parent's export proceeds from sales to the UAE company must be realised within the FEMA export timeline, and rupee or dirham invoicing under the India-UAE local currency arrangement should be confirmed with both banks; neither point could be source-checked.
Licences and approvals
In the UAE the company needs a trade licence from the emirate's economic department (mainland) or the free zone authority, plus any activity-specific approvals. On the Indian side there is usually no separate government approval for a manufacturing company's overseas subsidiary beyond the overseas investment process, but company-law approvals for the investment apply.
- Under the automatic route the main gate is the AD bank, which checks bona fides and pricing; prior RBI approval is needed only above the limits or outside the automatic route.2512
- Mainland: initial approval, trade name, memorandum of association, premises and the licence from DET (Dubai) or the relevant Department of Economic Development. Initial approval alone does not allow trading.192244
- Some activities need approval from a sector authority, for example the Ministry of Economy for foreign branches, the Ministry of Industry and Advanced Technology for an industrial licence if the hub does any manufacturing or assembly, and the Central Bank for financial activities.22
Structures to consider
These are the structures businesses commonly weigh, not a recommendation. The right one depends on the facts listed under "What we need from you".
What has to happen first
- IndiaBoard of the Indian parent approves the UAE project, the investment amount and the structure; check the net-worth headroom and any lender NOC needed.
- Both sidesDecide the UAE vehicle (free zone, mainland or both) after mapping customers, goods flows and whether QFZP conditions can be met.After step 1
- United Arab EmiratesCheck the activity against UAE strategic-impact rules and any sector approvals; reserve the trade name and obtain initial approval from DET, the relevant economic department or the free zone authority.After step 2
- IndiaDesignate the AD bank in India and file Form FC to obtain the UIN before any remittance.After step 1, 2
- United Arab EmiratesSign the memorandum of association and lease, and obtain the trade licence and any activity approvals.After step 3
- Both sidesOpen the UAE corporate bank account and remit the share capital from India through the designated AD bank.After step 4, 5
- United Arab EmiratesRegister the UAE company for corporate tax and, once over the threshold, for VAT; register with customs for import and export.After step 5
- Both sidesSet intercompany agreements (supply, distribution, services, guarantees) and a transfer pricing policy that works under both Indian and UAE rules.After step 2, 6
- Both sidesArrange work permits and residence visas for staff, and settle the tax and social security position of Indian employees sent to the UAE.After step 5, 6
- Both sidesSet up governance so key management decisions for the UAE company are taken in the UAE (board composition, meetings, signing authority).After step 5
- Both sidesStart trading: CEPA certificates of origin on Indian exports, customs entries in the UAE, and export proceeds realised within the FEMA timeline.After step 6, 7, 8
- Both sidesOngoing compliance: APR by 31 December, UAE corporate tax return within nine months of year end, transfer pricing files on both sides, and repatriation of declared dividends within 90 days.After step 11
What we need from you before anyone can advise
- Where the customers are: share of sales to UAE mainland buyers versus re-export to GCC, Middle East and Africa.
- How goods will move: direct shipment from India to end customers, or stocking in a UAE free zone or mainland warehouse.
- The Indian parent's net worth on its last audited balance sheet and existing overseas financial commitments.
- Group consolidated revenue (for UAE top-up tax, Small Business Relief and transfer pricing thresholds).
- Products and HS codes, and whether they meet CEPA rules of origin.
- Whether the UAE company will do any assembly, repackaging or manufacturing (industrial licence).
- How many staff will be hired locally versus sent from India, and for how long.
- Who will sit on the UAE board and where strategic decisions will in practice be made.
- Whether any group entity's account is an NPA or under investigation.
- Plans to hold African or GCC subsidiaries, and whether any entity will invest into India.
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- Official text of the Overseas Investment Rules, 2022 could not yet be checked; the 400% net-worth limit and the bona fide business definition rely on secondary sources.
- Section numbers and wording of the Income-tax Act, 2025 for company residence (place of effective management), taxation of foreign dividends and any inter-corporate dividend deduction could not yet be checked on the official site; treatment of dividends from the UAE company must be confirmed.
- Whether India has controlled foreign company rules: no official statement could be located; confirm with an Indian tax adviser.
- Official India-UAE tax treaty text (dividend, permanent establishment and residence articles) could not yet be checked; the dividend rate relies on a secondary source.
- UAE free zone customs treatment and the conditions for free-zone companies selling into the mainland were not confirmed on Dubai Customs or u.ae pages.
- UAE work permit and visa process (MOHRE versus free zone authority), Emiratisation targets and end-of-service rules were not source-checked (MOHRE page could not yet be checked).
- Whether an India-UAE social security agreement exists was not confirmed (EPFO page could not yet be checked).
- Indian individual residence rules for staff sent to the UAE, including deemed residence for citizens not liable to tax elsewhere, were not confirmed under the Income-tax Act, 2025.
- FEMA export proceeds realisation period, the RBI-CBUAE local currency settlement arrangement and the AED-USD peg were not source-checked.
- GST zero-rating of exports and Indian export incentive schemes (such as RoDTEP and duty drawback) were not source-checked.
- Companies Act, 2013 approvals for the Indian parent's investment (board and, above limits, shareholder approval for inter-corporate investments) were not source-checked.
- Whether a specific free zone is a Designated Zone for tax purposes must be checked against the current Cabinet list and the FTA guide TAXP010 (October 2026), which could not yet be checked.
Brief for your advisers
Questions to put to your advisers in each country. Copy them, or download them as a text file to send with your requirement.
- For our AD bank: what documents will you need for Form FC and the UIN, and how do you apply the bona fide business and pricing checks to a UAE trading or holding company?
- Indian tax adviser: how will dividends from the UAE company be taxed in the Indian parent under the Income-tax Act, 2025, and what relief or deductions are available?
- Indian tax adviser: what governance do we need so the UAE company's place of effective management is not in India, given that the founders are based in India?
- Both tax advisers: what transfer pricing method and documentation will satisfy both India and the UAE for goods sold by the Indian factory to the UAE company?
- UAE tax adviser: can our chosen free zone deliver Qualifying Free Zone Person status for our sales mix, is it a Designated Zone, and how will mainland sales affect the de minimis test?
- UAE corporate adviser: mainland LLC, free-zone company or both, given where our customers are, and what licences and approvals will each need for our activities?
- Customs adviser: which of our products qualify for CEPA preferences, what origin documentation do we need, and how will goods held in a free zone be treated on release to the mainland?
- UAE employment adviser: which authority issues our work permits, do Emiratisation targets apply to us, and what end-of-service obligations arise?
- Indian employment and tax adviser: how will Indian staff sent to the UAE be taxed in India and what social security position applies?
- Banking: which UAE banks will onboard a newly formed subsidiary of an Indian manufacturer, what KYC will they require, and can we invoice and settle in rupees or dirhams?
Who can help, on each side
India
- Setting up and running a company · Arranged by WONE Global on request
- Payments and currency · Arranged by WONE Global on request
- Licences, permits and regulators · Arranged by WONE Global on request
- Tax and structuring · Led by Sandeep Gupta
- Accounting and annual filings · Led by Sandeep Gupta
- Customs, trade and export controls · Arranged by WONE Global on request
- Employment, payroll and immigration · Arranged by WONE Global on request
- Banking and capital · Arranged by WONE Global on request
- Treasury and funding · Arranged by WONE Global on request
United Arab Emirates
- Setting up and running a company · Led by Dr Hajra Nazir
- Payments and currency · Arranged by WONE Global on request
- Licences, permits and regulators · Arranged by WONE Global on request
- Tax and structuring · Led by Priju Dominic
- Accounting and annual filings · Led by Priju Dominic
- Customs, trade and export controls · Arranged by WONE Global on request
- Employment, payroll and immigration · Arranged by WONE Global on request
- Banking and capital · Arranged by WONE Global on request
- Treasury and funding · Arranged by WONE Global on request
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 18 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Overseas investment by Indian residents is governed by the RBI Master Direction - Overseas Investment, read with the Foreign Exchange Management (Overseas Investment) Rules, 2022 and Regulations, 2022. Applies to any person resident in India making overseas direct or portfolio investment, including an Indian company setting up a UAE subsidiary. The Master Direction was issued on 24 July 2024 and its content was updated as on 1 April 2026.
The Rules (G.S.R. 646(E), 22 August 2022) are issued by the Central Government; the RBI-hosted gazette PDF of the Rules returned a bot check and could not yet be checked.
Overseas investment may be made only in a foreign entity engaged in a bona fide business activity, directly or through a step-down subsidiary or special purpose vehicle. The Master Direction does not define bona fide business activity; the definition sits in the OI Rules.
Under the OI Rules, bona fide business activity means an activity permissible under the laws in force in both India and the host country. Host country here is the UAE (and any further jurisdiction where step-down subsidiaries sit).
Secondary source: the official text of the OI Rules could not yet be checked.
An Indian entity's total financial commitment in all foreign entities taken together must not exceed 400% of its net worth as per its last audited balance sheet, or as directed by the Reserve Bank. Overall automatic-route limit in Schedule I of the OI Rules. Financial commitment includes equity, debt and guarantees given to or on behalf of the foreign entity.
Secondary source. The RBI Master Direction (para 21) refers to the Schedule I limit without stating the percentage, and the official Rules text could not yet be checked.
A financial commitment by an Indian entity exceeding USD 1 billion (or equivalent) in a financial year requires prior RBI approval, even if it is within the overall automatic-route limit. Counts all financial commitments by the Indian entity in the financial year, not only the UAE investment.
A financial commitment in a foreign entity that has invested or invests into India is not permitted where it results in a structure with more than two layers of subsidiaries, and no further layer may be added to such a structure. Implements rule 19(3) of the OI Rules (the round-tripping restriction). Relevant if the UAE company or any of its subsidiaries invests back into India.
The Master Direction does not use the term round tripping; the description of rule 19(3) as a round-tripping control comes from secondary commentary.
An Indian investor must designate one authorised dealer (AD) bank and route all transactions relating to an overseas direct investment through it. A unique identification number (UIN) must be obtained through the designated AD bank before the outward remittance or acquisition of equity, whichever is earlier. The bank can be changed after obtaining an NOC from the existing bank.
Form FC, with the required documents, must be submitted to the AD bank to obtain a UIN on or before making the initial overseas direct investment. The UIN is a database number and is not an RBI approval.
An Indian investor with overseas direct investment must submit an Annual Performance Report for each foreign entity by 31 December each year. Not required where the holding is under 10% without control and there is no other financial commitment, or where the foreign entity is under liquidation. The APR must be certified by a chartered accountant where statutory audit does not apply (Master Direction para 17(3)).
Late reporting of overseas investment can be regularised by paying a late submission fee of INR 7,500 plus 0.025% of the amount involved for each year of delay for transactional forms, capped at 100% of the amount. A flat INR 7,500 applies to certain non-transactional returns such as the APR.
An Indian entity whose account is a non-performing asset, that is classified as a wilful defaulter or that is under investigation must obtain an NOC from the lender bank, regulator or investigating agency before making a financial commitment. Applies before any new financial commitment or disinvestment.
The price for issue or transfer of equity in an overseas investment must comply with rule 16 of the OI Rules, and the AD bank may rely on internationally accepted pricing methodology under its board-approved policy. Secondary commentary describes rule 16 as an arm's length pricing requirement.
UAE federal law permits 100% foreign ownership of mainland commercial companies and abolished the former requirement for a majority Emirati shareholder. Introduced by Federal Decree-Law No. 26 of 2020 and consolidated in Federal Decree-Law No. 32 of 2021 on Commercial Companies. Mainland only; free zones have their own regimes.
The UAE Cabinet identifies activities of strategic impact, for which specific licensing requirements, including limits on foreign ownership, may apply. Recommendations come from a committee of relevant authorities; the Cabinet decides. The list of activities is maintained outside the page (it links to an Invest Dubai list).
Branches of foreign companies on the UAE mainland are no longer required to appoint a UAE national service agent. Mainland branches. Branch licensing still needs approvals listed in iae-021.
An Indian company is taxed on its worldwide income, with double taxation relieved through tax treaties or unilateral relief and foreign tax credit rules. Applies to dividends and any other income the Indian parent earns from the UAE company.
Secondary source.
An Indian entity may remit funds to its own branch or office outside India for normal business operations, but no such remittance may be used for making any overseas investment. Relevant to the choice between a UAE branch and a UAE subsidiary of the Indian parent.
The mainland legal forms are general partnership, limited partnership, limited liability company (LLC), public joint stock company and private joint stock company, and the form must match the business activity. Mainland. Branches of foreign companies are licensed separately.
Mainland trade licences are issued by the emirate's economic department: the Department of Economy and Tourism in Dubai and the Department of Economic Development in Abu Dhabi, Ajman, Umm Al Quwain and Ras Al Khaimah. Sharjah uses its Economic Development Department and Fujairah its Municipality. Free-zone companies are licensed by the relevant free zone authority instead.
A Qualifying Free Zone Person can benefit from a 0% corporate tax rate on its qualifying income. Free-zone entities only, and only where all conditions are met. Non-qualifying income is taxed at 9%.
Distribution of goods in or from a Designated Zone is a qualifying activity for the 0% rate, but only where goods entering the UAE are imported through the Designated Zone; the same activity from an ordinary free zone that is not a Designated Zone does not qualify. Sales to mainland customers that do not fall within a qualifying activity count towards the de minimis limit.
Secondary source. Whether a particular free zone is a Designated Zone must be checked against the current Cabinet list; the FTA guide TAXP010 (October 2026) covers this but could not yet be checked.
Initial approval confirms that the UAE Government has no objection to the business being set up but does not authorise it to operate, and some activities need approval from the relevant authority before this step. Examples of activity approvals listed include the Ministry of Economy (foreign branches and representative offices), the Ministry of Industry and Advanced Technology (national industrial licence), and the Central Bank (financial activities).
An Indian entity not engaged in financial services may invest in a foreign entity engaged in financial services (other than banking or insurance) only if it has posted net profits in each of the preceding three financial years. Relevant if the UAE hub is to carry on regulated financing or treasury activity for third parties; exceptions apply for IFSC entities.
Read on the 2022 Directions page; the paragraph numbering is carried into the updated Master Direction but the 2026 text of this paragraph was not separately compared.
The Income-tax Act, 2025 is the operative Indian income-tax statute, with transition provisions from the Income-tax Act, 1961 in section 536. Central Government tax. The Income-tax Rules, 2026 accompany it.
The page does not itself state the commencement date; 1 April 2026 (tax year 2026-27) reflects the research brief and PwC. Section numbers for residence, dividends and transfer pricing under the 2025 Act could not yet be checked from the official site. Independent check 19 Oct 2026: the cited page lists the 2025 Act but does not state section 536 or the transition provisions; downgraded to research draft until the section text is confirmed.
Withholding tax under UAE corporate tax law is set at 0% on relevant UAE-sourced income of non-residents. Means no UAE withholding on dividends paid by the UAE company to its Indian parent.
Under the India-UAE tax treaty, tax on dividends in the source state is limited to 10%. Interest is limited to 5% on bank or financial-institution loans and 12.5% otherwise; royalties to 10%. The treaty has no separate fees-for-technical-services article.
Secondary source; the official treaty text on incometaxindia.gov.in could not be located through the site navigation.
A foreign company is resident in India in a year if its place of effective management (where key management and commercial decisions for the business as a whole are in substance made) is in India. Circulars say the POEM test does not apply to a foreign company with turnover or gross receipts of INR 500 million or less in the year.
Secondary source; the corresponding provision of the Income-tax Act, 2025 could not yet be checked.
The FTA lists the making of key management and strategic decisions in the UAE, board meetings held in the UAE and UAE-resident board members as indicators of effective management and control in the UAE, and says dual residence is resolved under double tax agreements. Relevant where the Indian parent's management also directs the UAE company.
Indian transfer pricing rules require international transactions between associated enterprises to be at arm's length, supported by annual documentation and an accountant's report filed one month before the income tax return. A new accountant's report form applies from tax year 2026-27. A master file is required for groups with consolidated turnover above INR 5 billion (plus transaction thresholds); country-by-country reporting applies above INR 64 billion.
Secondary source.
UAE corporate tax is charged at 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. Applies to financial years beginning on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022. Large multinational groups may be subject to the top-up tax in iae-030.
All taxable persons, including free-zone persons, must register for UAE corporate tax and obtain a Corporate Tax Registration Number, and returns are due within nine months of the end of each tax period. Payment is generally due by the same deadline.
To be a Qualifying Free Zone Person an entity must maintain adequate substance in a free zone, derive qualifying income, not elect for standard taxation, comply with transfer pricing rules, prepare audited IFRS financial statements and keep non-qualifying revenue within the lower of 5% of total revenue or AED 5 million. Revenue of a domestic permanent establishment (for example a mainland branch), taxed separately at 9%, is excluded from the de minimis test.
Secondary source; the Ministry of Finance page confirms the 0% regime but does not list the conditions, and the FTA Free Zone guide PDF could not yet be checked.
A free-zone entity that fails any Qualifying Free Zone Person condition is taxed at 9% on all its income for that year and the following four years.
Secondary source.
UAE transfer pricing rules apply to transactions with related parties and connected persons, whether they are on the mainland, in a free zone or abroad. Covers the UAE company's dealings with its Indian parent and sister companies.
A UAE master file and local file are required where the taxpayer's revenue is AED 200 million or more or it belongs to a multinational group with consolidated revenue of AED 3.15 billion or more, and must be provided within 30 days of an FTA request. A transfer pricing disclosure form is filed with the return where related-party transactions exceed AED 40 million in aggregate.
Secondary source.
The UAE top-up tax applies a 15% minimum effective tax rate to UAE entities of multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years. Fiscal years beginning on or after 1 January 2025. Groups operating only within the UAE are out of scope. The FTA published a scope and registration guide in October 2026.
Small Business Relief (revenue up to AED 3 million) cannot be elected by a Qualifying Free Zone Person or by a member of a multinational group with consolidated revenue above AED 3.15 billion.
The UAE standard VAT rate is 5%, and resident businesses must register once taxable supplies exceed AED 375,000. Some supplies are zero-rated or exempt; voluntary registration from AED 187,500. Certain goods transactions between companies in Designated Zones may be outside the scope of VAT.
Secondary source. The u.ae VAT page could not yet be checked.
India's Directorate General of Foreign Trade runs a common digital platform giving single-point access to certificates of origin for all free trade and preferential trade agreements, and all designated issuing agencies must work through it. Preferential certificates for CEPA exports; non-preferential certificates moved to the eCoO 2.0 system from 6 September 2024.
The page does not name India-UAE CEPA specifically; coverage is inferred from its statement that it covers all FTAs and PTAs.
UAE customs duty is generally charged at 5% of the CIF value of imports, and the UAE is part of the GCC Customs Union. Other rates apply to some goods such as alcohol and tobacco. Preferential CEPA rates can reduce this for qualifying Indian-origin goods.
Secondary source; Dubai Customs pages could not yet be checked.
Under the CEPA, tariffs are reduced or removed on more than 80% of products, some at zero from day one and others phased down over time, and preferential rates are looked up by HS code in the UAE Market Access Dashboard. Preferential rates depend on the HS code and on the goods meeting CEPA rules of origin.
The page does not set out the rules of origin chapter; the official agreement text could not yet be checked.
The UAE-India Comprehensive Economic Partnership Agreement (CEPA) entered into force on 1 May 2022. Bilateral agreement between India and the UAE; it has 18 chapters and 11 annexes.
All dues receivable from the foreign entity must be realised and repatriated to India within 90 days of falling due. Also applies to sale or disinvestment proceeds (90 days from transfer) and liquidation proceeds (90 days from distribution). The regulation refers to dues generally; dividends declared by the UAE company are understood to be dues once declared.
Treating declared dividends as dues falling due is our reading; confirm with the AD bank.
Mainland licence categories set by the Ministry of Economy include industrial, commercial and professional licences. Mainland. Emirate authorities offer further licence types (for example eTrader and dual licences in Dubai).
