UAE vs. India Taxation: Key Advantages for Investors
When it comes to global business and investment, two powerhouses that often come up are the United Arab Emirates (UAE) and India. Both countries have rapidly growing economies with vast opportunities, but when it comes to taxation — the key factor that affects investor profitability — they are worlds apart. Understanding the differences between their tax systems can help entrepreneurs make smarter decisions about where to base and grow their businesses.
The UAE is globally recognised for its investor-friendly tax regime, with no personal income tax, no tax on dividends or capital gains, and a competitive 9% corporate tax. Meanwhile, India follows a more complex tax system with progressive income tax rates, multiple GST slabs, and corporate tax structures that vary based on turnover and type of business. Both have their strengths — India’s large domestic market and the UAE’s simplicity and tax efficiency — but for international investors, the UAE offers a clear edge.
Overview of the UAE Taxation System (2025)
1. Zero Personal Income Tax
One of the UAE’s biggest advantages is the absence of personal taxation. Residents and expatriates are not required to pay tax on salaries or personal income. Additionally, there is no tax on dividends, capital gains, or inheritance, making it highly attractive for high-net-worth individuals and business owners.
2. Competitive Corporate Tax
Introduced in 2023, the UAE’s corporate tax rate remains among the lowest globally:
- 0% on taxable income up to AED 375,000 (encouraging SMEs and startups).
- 9% standard rate on profits exceeding AED 375,000.
- 0% corporate tax for qualifying income in designated Free Zones.
- 15% minimum top-up tax for multinational groups under the OECD’s global tax framework (effective 2025).
3. Value Added Tax (VAT)
The UAE introduced VAT in 2018 at a modest 5% — one of the lowest rates in the world. Essential sectors such as healthcare, education, and exports are either zero-rated or exempt from VAT, ensuring a balanced system that supports both businesses and consumers.
4. Double Taxation Avoidance Agreements (DTAAs)
As of 2025, the UAE has signed over 140 DTAAs with major economies, including India, the UK, China, and Singapore. These agreements prevent income from being taxed twice, giving foreign investors greater clarity, security, and returns on cross-border investments.
Overview of the Indian Taxation System (2025)
1. Personal Income Tax (PIT)
India follows a progressive income tax structure with two regimes — the Old Regime (with deductions) and the New Regime (lower rates, fewer deductions). The highest income tax slab reaches 30% plus surcharge and cess, which can increase the effective rate to around 42.74% for high earners.
2. Corporate Tax
Corporate tax rates in India vary based on turnover, structure, and incentives:
- 25% for domestic companies with turnover up to ₹400 crore.
- 22% for companies opting for the simplified Section 115BAA regime.
- 15% for new manufacturing companies (under Section 115BAB).
- 30% for other domestic companies.
- 40% for foreign companies, plus applicable surcharges and cess.
3. Capital Gains Tax
Capital gains taxation in India depends on the holding period and asset type:
- Short-Term Capital Gains (STCG): Up to 20% for equities and standard income rates for other assets.
- Long-Term Capital Gains (LTCG): 12.5% for listed securities and real estate (without indexation) or 20% with indexation for older properties.
4. Goods and Services Tax (GST)
India’s GST system includes multiple tax slabs ranging from 0% to 28%, depending on the type of goods and services. Although designed to unify the indirect tax structure, it remains more complex compared to the UAE’s flat 5% VAT.
UAE vs. India: A Comparative Overview
| Tax Category | UAE | India |
| Personal Income Tax | 0% | Up to 30% (plus surcharge & cess) |
| Corporate Tax | 0%–9% (Free Zones may qualify for 0%) | 15%–40% depending on regime & company type |
| Capital Gains Tax | 0% | 12.5%–20% depending on asset type |
| Indirect Tax (VAT/GST) | 5% | 5%–28% |
| Double Taxation Treaties | 140+ countries | 90+ countries |
Key Takeaways for Investors
- Lower Taxes, Higher Returns: The UAE’s minimal taxation framework allows investors to retain a greater portion of their profits.
- Simplified Compliance: Fewer tax categories, lower documentation, and streamlined VAT reporting make operations easier in the UAE.
- Investor Protection: UAE’s DTAAs and business-friendly regulations create a secure environment for foreign investments.
- Global Accessibility: With 100% foreign ownership and Free Zone incentives, the UAE is a prime hub for international expansion.
While India offers an extensive domestic market and long-term growth opportunities, the UAE’s tax-efficient structure, global connectivity, and business-friendly ecosystem make it a leading destination for entrepreneurs seeking to maximise profits with minimal tax burdens.
At Experts Tax Consultants, we help businesses and investors evaluate UAE business setup opportunities, understand tax implications, and structure operations for maximum efficiency and compliance. Contact us today to explore how your investments can thrive under the UAE’s modern tax regime.
