This story is from June 16, 2022

Explainer: Why Indian entrepreneurs are using the golden visa to move base to Dubai

Lured by the ease of setting up business, complete waiver on personal income tax, and a friendlier policy environment, several of India's tech entrepreneurs have been emigrating to the UAE using the country's golden visa program, at a time when India has emerged as the third largest startup ecosystem in the world after the US and China.
Explainer: Why Indian entrepreneurs are using the golden visa to move base to Dubai
Lured by the ease of setting up business, complete waiver on personal income tax, and a friendlier policy environment, several of India's tech entrepreneurs have been emigrating to the UAE using the country's golden visa program, at a time when India has emerged as the third largest startup ecosystem in the world after the US and China.
New Delhi: The UAE is all set to attract the largest number of millionaires in the world this year, surpassing big countries like Australia, Singapore, Israel, Switzerland, USA, Canada, New Zealand, UK, and others. The latest Henley Global Citizens Report projected that 4,000 millionaires will migrate to the UAE in 2022. Among the 10 countries where the highest net outflows of HNWIs are predicted are Russia, China, India, Hong Kong, Ukraine, Brazil, the UK, Mexico, Saudi Arabia, and Indonesia.
In fact, the report predicts that at least 8,000 super rich Indians will migrate out of India this year and their top two preferred destinations are Dubai and Singapore.
India does not allow a dual passport regime, and most HNWIs are looking for residency permits or multiple entry and long-term visas, rather than all-out citizenship.
Lured by the ease of setting up business, complete waiver on personal income tax, and a friendlier policy environment, several of India's tech entrepreneurs have been emigrating to the UAE using the country's golden visa program, at a time when India has emerged as the third largest startup ecosystem in the world after the US and China.
Indians form over 30 per cent of the startup community in Dubai and the city wants to attract a lot more tech talent from India. It is offering 100,000 “golden visas," that allow entrepreneurs and technology investors to live in the country for up to 10 years, longer than regular visas and has even set up a national small-business programme to help startups find funding, partner with established companies and market their products overseas.
What is this golden visa?
The golden visa, issued for five or 10 years, is essentially a long-term residence visa for the UAE. It is offered to investors, entrepreneurs, people with specialised talents and researchers in the fields of science, culture and art as well as students with promising scientific capabilities. The visa allows foreigners to live, work and study in the UAE without a national sponsor and with 100% ownership of their business in the UAE.

Golden Residence for start-up entrepreneurs/investors
Under the new rules, entrepreneurs/investors can get a 10-year residence visa by investing in a start-up in the UAE. However, the start-up should be registered in the UAE in the category of small and medium enterprises (SME), and should have annual revenue of not less than AED 1 million (approx. Rs 2.1 crore). Secondly the start-up idea should be approved by an official business incubator, the Ministry of Economy, or the competent local authorities, explained Paresh Karia, a CA and CEO of Acquest Advisors.
Also this: founders or co-founders of any start-up can also apply for a Golden Residence visa if they have sold their company for AED 7 million or more (approx. Rs 14.5 crore).
Not just Dubai, even Abu Dhabi is keen on housing more Indian start ups
Apart from Dubai, the Emirate of Abu Dhabi is keen on housing more Indian startups in its 'Hub71' ecosystem. Hub71 is designed as an ecosystem to help startups across sectors in all its needs, from getting them access to venture funding to finding the right talent. In the last one year, the platform has attracted and supported startups at different stages of growth from sectors such as fintech, artificial intelligence, software development and healthtech from many countries, including India. Used car-focused Cars24 was the first Indian company to move into the space. The three other startups with Indian founders include Arcab, Hafla and Funder AI.
India to dubai
Source: Writer Relocation

But, what is the biggest advantage of moving base to Dubai?
To begin with, taxes in Dubai are lower for both starting and running a business. Residential property leases are taxed at a fixed rate of 5%, and commercial real estate leases are taxed at 10% . Even though landlords have to pay licence fees, Dubai has no capital gains tax.
"One of the main reasons for the Indian startup founders flocking their way to Dubai is because the taxes that a startup may incur while setting up a business is substantially lower as compared to India, especially in Dubai. Another reason for Indians moving to Dubai is the fact that leases for residential/commercial properties are taxed at a flat 5-10% and since the demographic of Dubai is more or less similar to India, that only adds to the attraction of setting up base there," said Suhael Buttan, Senior Associate, SKV Law Offices.
The other big attraction is zero personal tax
In Dubai, individuals are not subject to tax on their incomes from employment, real estate, equity investments or other personal income unrelated to a UAE trade or business. Businesses are also exempted from paying taxes on capital gains and dividends received from shareholdings.
But starting from June 2023, United Arab Emirates will be introducing a federal corporate tax on business profits for the first time. The country’s statutory tax rate will be 9% for taxable income exceeding 375,000 UAE dirhams ($102,000), and zero for taxable income up to that amount “to support small businesses and startups. Free zone business, meanwhile — thousands of which exist in the country — will “continue to benefit from corporate tax incentives” as long as they “meet all necessary requirements." Point to note: Companies within the UAE’s many free zones are typically offered a 15-50 year ‘tax holiday'.
There are no restrictions on foreign ownership, no restrictions on capital and profit repatriation, and an exemption from import duties on goods brought into the zone. Two free economic zones, the Abu Dhabi Global Market and the Dubai International Financial Centre, are among the favorites for international startups to register their holding companies.
"What makes it further lucrative for technologists is UAE’s almost benevolent tax structure, which provides for a complete waiver of personal income tax and minimum capital gains tax, in stark contrast with India’s onerous direct (and indirect) tax regime," said Nikhil Varma, Managing Partner, Miglani Varma & Co – Advocates, Solicitors and Consultants.
"If I earn in India I have to pay 35% tax, but in Dubai my personal income tax is zero. From a corporate level too, I would end up paying a corporate tax of close to 35% in India. But my biggest reason for moving is the constant harassment by agencies, regulatory hurdles, rade tape and the fear that the authorities will come chasing after you with regressive tax laws, " said a venture capitalist on condition of anonymity who moved base to the UAE in 2020.
On income over Rs 15,00,000, India imposes a 30 percent personal income tax, which can rise to 40 percent with a surcharge and long-term capital gains tax.
Ease of moving in and out of the country
The hope for a better standard of living fused the desire for a stronger passport are major facets among others that are driving the wealthy tech founders outside the Indian subcontinent. According to the Henley Private Wealth Migration Dashboard, the Islamic state is set to pull the largest inflow of high net worth individuals internationally this year (at least 4,000) — a dramatic increase of 208% versus 2019’s net inflow of 1,300 and one of its largest on record. "This mirrors the country’s rise in the Henley Passport Index rankings too over the past decade as it focused on attracting tourism and trade by implementing mutually reciprocated visa waivers. The UAE is now doing the same with its competitive, agile approach to adapting immigration regulations to attract private wealth, capital, and talent," said The Henley Global Citizens Report.
" A new generation of tech entrepreneurs have become increasingly savvy about wealth preservation and growth, they are keen to diversify a portion of their wealth in jurisdictions offering a slew of incentives and high tax efficiencies. Reasons closer to home are driving this movement. The appeal of a higher standard of living, including better educational and health facilities for the family, continues to be a key driver, perhaps even more so in the wake of Covid. Increasingly stringent tax residency rules (introduced in 2020 and 2021), with no relief in individual taxation rates for high-net-worth individuals, coupled with a desire for visa-free travel are also consistent primary motivators for alternative residence and citizenship," said Bijal Ajinkya, a Partner in the Direct Tax, Private Client and Investment Funds.
During the pandemic, holders of the golden visa were not subject to bans or barriers to returning to the UAE if they were stuck overseas, which is why perhaps at least threee India-based executives at Sequoia Capital also moved to Dubai during the time, where they got long term permits to move freely in and out of UAE.
Moreover, at least a dozen prominent Indian startup founders and investors have relocated to Dubai. Kunal Shah of Cred, Vijay Shekhar Sharma of Paytm, OYO CEO Ritesh Agarwal, ed-tech unicorn Byju’s founder and CEO Byju Raveendran reportedly have golden visas even though this cannot be confirmed on record. Earlier this year, Nischal Shetty and Siddharth Menon, the founders of Indian cryptocurrency exchange WazirX also shifted base to Dubai.
Better access to international investors, for fund raising and future M&A opportunities
"Given the lengthy enforcement processes, many international investors are not comfortable with investing in Indian companies. They prefer to invest in companies based in jurisdictions, wherein the enforcement process is relatively less time consuming, even if the same may be slightly expensive," said Hemang Parekh, Partner, DSK Legal. Moreover, Dubai has more favourable IP protection laws. This is especially critical for businesses, such as NFTs and other tech businesses which are very IP sensitive, added Parekh.
Dubai also offers flexibility/clarity in the laws for some of the new age business/activities like crypto and NFTs. For example: ADMG, the free zone in Abu Dhabi has already issued comprehensive guidance and regulations for cryptocurrency activities. In India, on the other hand, there is no clarity in crypto regulations, while there is 30 percent tax on virtual digital assets and a 1 percent TDS per transaction (from July 1).
Since November 2021, several Web3 entrepreneurs have moved shop to Dubai in fear of constant harassment by tax officials, red tape and epidements like frozen bank accounts or blocking of UPI payments for crypto exchanges.
Ease of doing business
"Dubai has a business friendly startup ecosystem offering myriad benefits, from setting up, 100% foreign ownership, ease of doing business, excellent infrastructure to low tax structures. Some lucrative incentives are also offered to attract foreign startups. For example: labour cost subsidies," said Anushkaa Arora, Principal & Founder, ABA Law Office.
Better lifestyle and safety
There are many reasons why wealthy individuals move to the UAE, an international business hub with a high-income economy and a reputation for being the safe oasis in the Middle East and Africa region.
"UAE residents stand to benefit from among the world’s most competitive tax rates, along with the likes of Monaco and Bermuda. In terms of lifestyle, the UAE is a renowned luxury hub, with top- end apartments and villas and world-class shopping malls and restaurants. For those with children, there are excellent international schools, and many beaches with yachting, water sports, and other leisure activities," said Andrew Amoils, Head of Research at New World Wealth.
"India is a major economy and a challenging market for business. Entrepreneurs are always on the lookout for tax friendly places. In Dubai & Singapore, extensive network of tax treaties with multiple countries are helping companies to do international business," said Simon Mason, Chief Operating Officer and Chief Revenue Officer, Writer Relocations.
Harassment by taxmen
Of the several tax experts, venture capitalists and lawyers that we spoke to, harassment by tax officials was cited as one of the primary reasons for tech founders to move base out of India.
" When founders raise money from global PE funds, they come under the taxmen's lens. In order to avoid unnecessary regulatory notices and the constant back and forth with tax officials, several founders prefer to move overseas," said another Indian VC who now runs operations out of Dubai and UK. Several startup founders are now also moving after cashing out by selling their startups.
"The combined effect of a multitude of factors back home is responsible for driving Indian entrepreneurs away. An onerous taxation regime is a key push factor, add to that the fact that any income generated from cryptocurrencies being charged a whopping 30% tax. Starting July, an additional 1% charge will also be levied on transfer of digital assets.
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