When it comes to business and investment, two names that often come up are the UAE and India. Both are fast-growing economies offering plenty of opportunities, but what truly sets them apart for investors is taxation. Taxes can make a big difference in how much profit you actually take home, and that’s why many entrepreneurs compare the UAE’s tax-friendly system with India’s more structured but higher-tax setup.
The UAE is known for its investor-friendly tax policies - there’s no personal income tax, no tax on capital gains or dividends, and even the newly introduced 9% corporate tax is among the lowest in the world. On the other hand, India’s tax system is more layered, with higher income tax rates, capital gains tax, and multiple GST slabs that can go up to 28%. While India continues to attract investors with its large market and growing economy, many are drawn to the UAE’s simpler and more relaxed tax environment.
Considering the complexity of both, we’ll make it easy for you to understand the key tax differences between the UAE and India, highlight the main benefits for investors, and explain why so many entrepreneurs and global businesses are choosing the UAE as their base for growth and expansion.
Overview of the Taxation System in the UAE in 2025
The United Arab Emirates (UAE) has built a reputation as a tax-friendly destination, making it a top choice for investors and entrepreneurs. Let’s take a look at the UAE’s taxation system in 2025 and why it’s so appealing.
1. Zero Personal Taxation
The UAE maintains its standing as one of the world's most tax-efficient destinations for individuals:
- No Personal Income Tax: Residents, including expatriates and UAE nationals, are generally not required to pay tax on their salaries or personal earnings.
- No Tax on Investment Income: The government typically imposes a 0% tax on capital gains realised from the sale of assets (like stocks and real estate) and 0% tax on dividends earned by individuals. There is also generally no wealth tax or inheritance tax.
2. Corporate Tax
The UAE introduced a corporate tax in 2023, but it’s still very competitive compared to other countries.
- 0% Rate: For taxable profits up to AED 375,000 (to support small businesses and start-ups).
- Standard Rate: Businesses pay 9% on taxable income above AED 375,000.
- Free Zone Exemptions: Companies in designated Free Zones can enjoy 0% corporate tax on qualifying income if they meet certain requirements.
- Minimum Top-Up Tax: Starting January 2025, large multinational groups with annual global revenue over €750 million will be subject to a 15% minimum top-up tax. This ensures global standards are met while keeping the UAE attractive for international businesses.
3. Value Added Tax (VAT)
As a consumption tax, VAT is the primary source of indirect revenue for the government:
- Standard Rate: A 5% VAT is applied to most goods and services. This remains one of the lowest VAT rates globally.
- Exemptions/Zero-Rated: Certain essential services and sectors, such as exports, international transportation, the first supply of residential property, and some healthcare and education services, are either zero-rated or exempt from VAT.
Double Taxation Avoidance Agreements (DTAAs):
As of 2025, the UAE has signed over 140 DTAAs with countries worldwide, including major economies like the UK, India, China, and Singapore. These agreements aim to eliminate or reduce double taxation on income, providing clarity on tax rights and enhancing the attractiveness of the UAE as a global investment hub.
Overview of the Taxation System in India in 2025
India's taxation system is structured to support its growing economy, offering a range of tax rates and compliance requirements. Here's an overview of the key aspects as of 2025:
1. Personal Income Tax (PIT)
Personal income is taxed based on slabs, with two parallel regimes available for individuals (Old Regime with exemptions/deductions, and New Default Regime with lower rates and fewer deductions).
Old Tax Regime: Allows deductions and exemptions; tax rates are:
- Up to ₹2.5 lakh: Nil
- ₹2.5 lakh to ₹5 lakh: 5%
- ₹5 lakh to ₹10 lakh: 20%
- Above ₹10 lakh: 30%
Additional surcharges and cess may apply.
New Tax Regime: Offers reduced tax rates without deductions:
- Up to ₹3 lakh: Nil
- ₹3 lakh to ₹7 lakh: 5%
- ₹7 lakh to ₹10 lakh: 10%
- ₹10 lakh to ₹15 lakh: 15%
- ₹15 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹25 lakh: 25%
- Above ₹25 lakh: 30%
Taxpayers can choose the regime that best suits their financial situation.
Residential Status: Tax liability is tied to the taxpayer's residential status. Resident and Ordinarily Resident (ROR) individuals are taxed on their worldwide income, while Non-Resident (NR) and Resident but Not Ordinarily Resident (RNOR) individuals are generally only taxed on income earned or accrued in India.
2. Corporate Tax Rates
Corporate tax rates in India vary based on the type and size of the company:
- For companies with a turnover up to ₹400 crore: 25%
- For companies opting for Section 115BAA: 22%
- For companies opting for Section 115BAB (new manufacturing companies): 15%
- Other domestic companies: 30%
- Foreign Companies: Generally taxed at a higher rate of 40%.
These rates are exclusive of applicable surcharges and cess
New Manufacturing Companies: Companies incorporated after October 1, 2019, that commence manufacturing and opt for a special regime can pay a much lower rate of 15% (subject to conditions and foregoing most deductions/incentives).
3. Capital Gains Tax
Capital gains tax in India depends on the holding period of the asset:
Short-Term Capital Gains (STCG) Tax Rates in India:
| Asset Type | Holding Period | Tax Rate |
| Listed Equity Shares, Equity Mutual Funds, Business Trust Units | Less than 12 months | 20% (with Securities Transaction Tax) |
| Unlisted Shares, Real Estate, Gold, Bonds, Debt Mutual Funds | Less than 24 months | Taxed at applicable income tax slab rates |
Note: The 20% tax rate applies to transactions completed on or after July 23, 2024, following the Union Budget 2024 revisions.
Long-Term Capital Gains (LTCG) Tax Rates:
| Asset Type | Holding Period | Tax Rate |
| Listed Equity Shares, Equity Mutual Funds, Business Trust Units | More than 12 months | 12.5% (above ₹1.25 lakh exemption) |
| Unlisted Shares, Real Estate, Gold, Bonds, Debt Mutual Funds | More than 24 months | 12.5% (without indexation) |
Note: For property acquired before July 23, 2024, taxpayers may choose between 12.5% without indexation or 20% with indexation.
4. Goods and Services Tax (GST)
India's GST system has been streamlined to include the following key rates:
- 5%: Essential items such as life-saving drugs, footwear priced below ₹500, and textiles.
- 18%: Standard rate applied to most goods and services.
- 40%: Special rate for luxury and harmful products, including luxury cars, tobacco, aerated drinks, and gambling services.
5. Compliance Complexity and Filing Frequency
India's tax system requires regular compliance:
- Income Tax Returns: Individuals and companies must file annual returns, with deadlines varying based on the type of taxpayer.
- GST Returns: Businesses must file monthly and annual GST returns, depending on their turnover and nature of business.
India vs. UAE Tax Comparison Table
Let’s take a look at how taxes in the UAE and India compare for investors in 2025.
| Feature | UAE (United Arab Emirates) | India |
| Personal Income Tax | 0% (Zero on salaries, wages, and personal earnings for residents). | 5% to 30% (Progressive slab-based system, plus Surcharge and Cess). |
| Corporate Tax (Standard) | 9% on taxable profits exceeding AED 375,000 (approx. $102,000). 0% on profits up to this threshold. | 25% to 30% (Varies based on turnover and type of company, plus Surcharge and Cess). Special low rate of 15% available for new manufacturing companies. |
| Corporate Tax (Special Cases) | 0% for Qualifying Free Zone Persons (QFZPs) on "Qualifying Income." 15% Domestic Minimum Top-Up Tax (DMTT) for MNEs with global revenue over €750M. | 40% for Foreign Companies (plus Surcharge and Cess). |
| Capital Gains Tax (Individual) | 0% (Generally no tax on gains from sale of stocks, real estate, or other personal assets). | 20% (Short-Term Capital Gains); 12.5% (Long-Term Capital Gains). |
| Dividends | 0% (Generally no tax on dividends received by individuals/investors). | Taxable at the individual's slab rate (up to 30% + Surcharge/Cess). |
| Indirect Tax | 5% Value Added Tax (VAT), one of the lowest consumption tax rates globally. | 5%–18% GST (standard rates); 40% on luxury and harmful goods (e.g., tobacco, aerated drinks). |
| Compliance & Filing | Low: Annual filing for Corporate Tax (mandatory for most businesses, even those at 0% rate). VAT filing is typically quarterly. | High: Requires monthly/quarterly GST filings, quarterly TDS filings, and annual income tax filings, leading to a higher administrative burden. |
| Tax Treaties (DTAAs) | Over 140 signed, used extensively for global tax planning and profit repatriation. | Over 90 signed, providing relief from double taxation but requiring strict compliance with treaty conditions (e.g., Tax Residency Certificate - TRC). |
Note: The tax rates and rules mentioned above are subject to change. Investors and businesses should always consult the latest regulations or a tax professional like Shuraa India before making decisions.
Key Tax Benefits for Investors in the UAE
The UAE has become a hub for global investors, and one of the main reasons is its tax-friendly environment. Here are the key reasons why entrepreneurs are choosing the UAE:
1. No Personal Income Tax
Individuals in the UAE don’t pay personal income tax, meaning your salary, investment income, and rental earnings remain completely yours.
2. Corporate Tax Benefits
Standard corporate tax is 9% on profits above AED 375,000. Companies in Free Zones can enjoy 0% corporate tax on qualifying income, making it highly attractive for startups and international businesses.
3. Ease of Repatriation
Investors can freely transfer profits and capital out of the UAE without restrictions, offering flexibility for global business operations.
4. Double Taxation Avoidance Agreements (DTAAs)
The UAE has over 140 DTAAs with countries worldwide, preventing the same income from being taxed twice and making cross-border investments smoother.
5. Special Incentives for Certain Sectors
Free Zones often offer tax holidays, customs duty exemptions, and other sector-specific incentives for tech, media, logistics, and finance businesses.
6. Encouragement for Wealth and Asset Diversification
With no tax on capital gains, dividends, or foreign income, investors can diversify portfolios internationally without facing high tax burdens.
UAE: A Smarter Choice for Global Investors
When it comes to taxation, the UAE offers significant advantages over India - from zero personal income tax and capital gains exemptions to low corporate tax rates, Free Zone benefits, and easy repatriation of profits. These features make the UAE an attractive destination for entrepreneurs, investors, and global businesses looking to maximise returns while minimising tax burdens.
If you’re considering expanding or relocating your business to the UAE, Shuraa can guide you every step of the way. From tax registration and compliance to choosing the right business structure, licensing, approvals, office space, and visas, we provide end-to-end support to make your UAE business journey smooth and hassle-free.