Have you noticed a surge of Indian companies setting up shop in Dubai? You're not wrong. Dubai has emerged as a major destination for Indian entrepreneurs, with statistics showing over 30% of Dubai's startups having Indian roots.
According to recent statistics, Indians make up a significant portion of the business community in Dubai, with over 50,000 registered Indian companies operating in the city.
This surge is driven by many reasons including favourable tax jurisdiction, business trade practices, crypto trading, income tax benefits, and more.
So, here are the top 10 reasons why Indians are setting up companies in Dubai.
Why Indians are Setting Up Companies in Dubai?
1. More Clients
Dubai's strategic location offers the vast Middle East and North Africa (MENA) market, with over 1 billion potential customers. Dubai attracts a high-spending clientele. Indian companies can benefit from this by potentially commanding higher prices and margins compared to what they might achieve in India.
2. International Business Transactions
Doing international business from India can be cumbersome. The government may not readily allow funds to be remitted outside the country, and a significant amount of documentation is required. In some cases, taxes like TDS (Tax Deducted at Source) and GST (Goods and Services Tax) under the reverse charge mechanism can also apply to international payments made from India.
But Dubai offers a free and open environment for international payments. This eliminates complexities and delays associated with moving money.
3. Credibility & Branding
Establishing your company in Dubai, an important business location, you can gain instant credibility and prestige. This can be particularly valuable when attracting new clients and investors, as a Dubai address can signify international reach, innovation, and quality.
4. Booming Dubai Real Estate
Property prices in Dubai are on the rise. This means that if an Indian entrepreneur invests in Dubai real estate now, they have the potential to sell it later for a profit as the market continues to grow.
Rental yields, which is the percentage of rental income compared to the property value, are much higher in Dubai compared to India. There might also be tax benefits associated with owning property through a company structure.
5. Business Trade Practices
Many Indian entrepreneurs are worried about sensitive trade information leaking from customs ports. This data could include details like - Who they purchase materials from and the cost at which they acquire materials.
This leaked data could be a disadvantage as competitors could use it to know the original purchase price, the source vendors, and competitors might offer lower prices to the same customers.
By establishing a company in Dubai, a sort of "middleman" is created. The Indian company can purchase materials from the supplier through the Dubai company. This way, even if data leaks at customs, it will only show the transaction between the Indian company and their Dubai entity, not the original supplier.
Essentially, the Dubai company acts as a confidentiality shield, protecting the Indian company's sensitive trade relationships.
6. No Limitation on Holding Foreign Currency
The RBI limits the amount of time Indian businesses can hold foreign currency in their domestic bank accounts. This can be inconvenient for companies involved in international trade, who may need to hold foreign currency for longer periods to manage fluctuations or conduct future transactions.
When businesses need to convert foreign currency back and forth due to RBI regulations, they may incur additional conversion charges. These charges can eat into profits.
Companies operating in Dubai can hold foreign currency like US Dollars in their accounts for unlimited periods. This provides greater flexibility in managing finances and international transactions.
(However, setting up a company in Dubai specifically to address these RBI limitations might not be the most straightforward solution, and there could be tax implications to consider. However, it is one factor that contributes to the overall appeal of Dubai for Indian businesses).
7. UAE Residence Visas
Setting up a company in Dubai opens doors to various UAE residence visas. This includes the prestigious Golden Visa, offering long-term residency (often 5 or 10 years) for entrepreneurs and investors. Employment visas and investor visas are also attainable through a Dubai company.
Residency visas allow Indians to live and work legally in Dubai, enjoying its high standard of living, cosmopolitan environment, and career opportunities.
8. Hiring Employees
When an Indian company has a branch or subsidiary in Dubai, it becomes eligible to sponsor employment visas for workers. This allows them to hire talent from various countries, including India, under the company's UAE registration.
Dubai attracts a large pool of skilled professionals from across the globe. An Indian company with a Dubai entity can tap into this wider talent pool to find the best people for their needs.
9. Crypto Trading
Dubai is establishing a clear and progressive regulatory framework for digital assets. This provides a more predictable and secure environment for crypto businesses to operate.
Compared to India's 30% tax on crypto profits, Dubai offers a more tax-friendly environment for crypto businesses. There are currently no taxes on cryptocurrencies in Dubai. So, Dubai is becoming a most popular destination for crypto traders worldwide.
10. Low Tax Jurisdiction
Dubai has a very favourable tax environment for all types of businesses. There is a corporate tax rate of just 9% after a certain limit and free zones offers Mutiple Tax & VAT benefits. In certain cases, profits earned by a Dubai company may not be taxed in India under the concept of a Permanent Establishment.
The Income Tax Act has specified the list of cases of when would profit earned by a Dubai company would be taxable in India and when would not. However, you need to structure your company in such a manner that it abides by the Govt. laws and is not taxable in India.
(Setting up a company in Dubai specifically to minimize taxes can be complex and might raise red flags with tax authorities in both countries. It's crucial to ensure all your operations comply with Indian and UAE tax regulations).
Consulting with a tax advisor or business setup consultant like Shuraa specializing in India-UAE tax matters is highly recommended.
Make it Happen with Shuraa
Dubai presents a wealth of opportunities for Indian entrepreneurs seeking to expand their reach and optimize their ventures. However, considering all the legalities & paperwork the process might seem daunting. But you don’t have to worry! Shuraa has got your back.
We are your one-stop shop for establishing your business in Dubai. Our team of experts will handle everything from company registration and licensing to securing visas and finding the perfect office space. We understand the unique needs of Indian entrepreneurs and will ensure a smooth transition for you and your team.
Don't miss out on the exciting possibilities that await in Dubai! Contact Shuraa Business Setup today for a free consultation.
