At a glance
| Corporate tax | Threshold | Small Business Relief | VAT registration | India side |
|---|---|---|---|---|
| 0% then 9% | AED 375,000 of taxable income | Revenue up to AED 3,000,000, to tax periods ending on or before 31 December 2029 | Compulsory above AED 375,000, voluntary above AED 187,500 | Overseas direct investment, Form FC through your AD bank |
Mainland, free zone or offshore
Pick the structure from where your customers are, not from a package price. Getting this wrong is expensive, because changing a licence later means re-doing the bank account, the visas and the tax registrations. If you are weighing another jurisdiction, see Singapore company registration. For the reverse direction, a foreign parent setting up in India, see foreign subsidiary.
Mainland
A mainland company is licensed by the emirate in which it is registered and is the route for selling into the UAE domestic market, bidding for local contracts and opening branches across the emirates. Since 2021 a foreign investor can own 100 percent of a commercial company on the mainland.
Free zone
A free zone company is governed by the free zone authority in which it is set up, and in some cases by another government entity as well. Free zones are the usual choice for export, re-export, services delivered abroad and holding structures, and each zone has its own activity list, office requirements and licence categories. For the India side of an export or re-export business, see IEC registration, and LUT filing if you invoice exports from India.
The point most pages gloss over: whether a free zone company can sell into the UAE market outside its zone depends on that zone's own rules and on the activity. Do not assume a free zone licence lets you trade onshore. We check the zone's regulations against what you actually plan to sell before you commit.
Offshore and holding registrations
Offshore or non-resident company registrations also exist in the UAE and are used mainly as holding vehicles. They are a different product from a mainland or free zone trade licence, and the corporate tax position of a holding vehicle needs its own review. We do not put one in a structure without that review.
Foreign ownership on the mainland
Full foreign ownership of commercial companies on the mainland came in through Federal Decree-Law No. 26 of 2020, which amended Federal Law No. 2 of 2015 on Commercial Companies. Before that, a foreign investor's shareholding was limited to a maximum of 49 percent.
The amendment annuls the requirement for commercial companies to have a major Emirati shareholder or agent. So a mainland company can be wholly owned by an Indian company or by Indian individuals, without a local partner.
Activity-specific rules still exist, so confirm the position for your licence category before you draft the shareholding.
UAE corporate tax
The rate and the threshold
The rates are 0 percent for taxable income up to AED 375,000 and 9 percent for taxable income above AED 375,000. The Federal Decree-Law applies to financial years beginning on or after 1 June 2023.
Registration is a separate step. A taxpayer must register for UAE corporate tax and keep its details updated, even if it is already registered for VAT. Treat the registration as part of the setup, not an afterthought.
| Taxable income | Rate |
|---|---|
| Up to AED 375,000 | 0% |
| Above AED 375,000 | 9% |
Small Business Relief
A resident person with revenue of AED 3,000,000 or less in the current and all previous tax periods can elect to be treated as not having derived any taxable income for that tax period. The Ministry of Finance extended the relief so that it applies to tax periods ending on or before 31 December 2029, by Ministerial Decision No. 131 issued on 7 August 2026.
Three things to know before you rely on it:
- It is an election, made for each tax period, not an automatic exemption.
- A return is still filed. Businesses eligible for the relief submit a simplified corporate tax return within the prescribed deadline.
- It is not open to everyone. A qualifying free zone person cannot use it, nor can a member of a multinational group with consolidated revenue above AED 3.15 billion. The arm's length principle still applies, although transfer pricing documentation is waived.
Free zone companies
A free zone person is within the corporate tax regime, and a Qualifying Free Zone Person can have a 0 percent rate, subject to conditions. Those conditions sit in Cabinet and Ministerial Decisions and turn on the nature of the income and the activity.
This is where a free zone brochure and the law can part company. We check your intended activity against the current decisions and tell you whether the 0 percent rate is realistically available, before you pay a licence fee on the strength of it.
Businesses engaged in the extraction of the UAE's natural resources and certain non-extractive activities subject to emirate-level taxation are outside the scope of corporate tax, on conditions.
VAT registration
Registration is compulsory once the total value of your taxable supplies and imports exceeds AED 375,000 over the previous 12 months, or where you expect it to exceed that in the next 30 days.
Voluntary registration is available at AED 187,500, on the same 12-month and 30-day tests, and taxable expenses can be counted for the voluntary threshold.
| Threshold | Amount | Test |
|---|---|---|
| Mandatory registration | AED 375,000 | Taxable supplies and imports over the previous 12 months, or expected in the next 30 days |
| Voluntary registration | AED 187,500 | Taxable supplies and imports, or taxable expenses, on the same tests |
Voluntary registration is worth considering where you buy in the UAE and sell abroad, because it lets you recover input VAT. We model it rather than default to it.
Substance, visas and Emirates ID
A UAE entity is expected to have real activity in the UAE, and what counts differs by regime, licence category and activity. We confirm the current requirement for yours rather than hand you a generic checklist.
On people: a mainland or free zone licence normally carries an allocation of employment visas, and every person who gets a residence visa is issued an Emirates ID. The number of visas, the office or desk requirement behind them, the medical steps and the cost vary by emirate, free zone and activity. We get the figures for your chosen zone in writing before you decide, and we do not publish package prices we have not verified.
The India side: what you must report
This is the part that goes wrong, and it goes wrong after the money has moved.
Overseas direct investment
If you are resident in India and invest in the equity of a UAE company, it is an overseas direct investment under the Foreign Exchange Management (Overseas Investment) Rules, 2022. It is reported to the Reserve Bank of India in Form FC through your authorised dealer bank.
Talk to your AD bank before you send the money, because the investment is reported through the bank, and late reporting under the overseas investment rules attracts a late submission fee. We prepare the pack and coordinate with the bank. We do not file with the RBI directly and we do not issue you a unique identification number.
If you invest as an individual
A resident individual can make an overseas direct investment only in an operating foreign entity, and not in one engaged in financial services. The remittance counts towards the Liberalised Remittance Scheme limit of US$250,000 per financial year, April to March.
So a holding-only UAE vehicle funded by an individual is a problem, not a plan. If the structure needs a holding company, the investor is usually an Indian private limited company rather than an individual, and that changes the approvals and the reporting.
Annual Performance Report
An Annual Performance Report is filed for the foreign entity each year. Where the entity has no statutory audit, which includes investments by resident individuals, it is certified by a chartered accountant. Budget for it from year one and keep the UAE accounts in a state where it can be certified. Put the date on your compliance calendar.
Is UAE income taxed in India?
If you are resident in India for tax purposes, you are taxed in India on your income wherever it arises, so profits you draw from a UAE company do not escape Indian tax simply by being earned abroad. Where the same income is taxed in both countries, relief comes under the tax treaty between India and the UAE.
Residence is a question of facts and days, and moving to the UAE does not change it by itself. Our NRI tax services and ITR for NRIs pages set out the residence tests, and Form 10F and the tax residency certificate cover what a payer needs before applying a treaty rate.
Get the residence position settled before you set up, not in the following July. It decides how the whole structure is taxed.
How we run a UAE setup
- Structure call. We map your customers, activity and funding, and recommend mainland, a specific free zone, or a holding structure, with the tax consequence of each stated.
- Name, licence and documents. We prepare the application pack for the chosen authority and get the corporate documents attested as that authority requires.
- Incorporation and licence. We run the filing with the emirate's authority or the free zone, through our UAE counterpart.
- Tax registrations. Corporate tax registration, and VAT registration where a threshold is crossed or voluntary registration makes sense.
- Bank account. We prepare the application. Approval is the bank's decision, so we make the file as strong as we can and tell you plainly what the odds look like.
- India-side reporting. We prepare the Form FC pack and coordinate the filing with your AD bank, then put the Annual Performance Report on your calendar.
What we need from you
- Passport and address proof of each shareholder and director, and the Indian entity's incorporation documents where the investor is a company
- A description of the activity, your customers and where they are located
- Proposed shareholding and the funding route, with the amount and timing
- Indian company's latest audited financial statements, where the investor is a company
- Your AD bank details and the branch handling the remittance
- Existing UAE licence and tax registration numbers, if you already have an entity
Fees
Our professional fee is on quote after a free review, because the work depends on the emirate or free zone, the activity and how many shareholders and visas are involved. UAE licence and government fees, and the UAE service provider's charges, are paid at actuals.
| Item | Amount |
|---|---|
| Regikart professional fee: UAE structure advice, setup coordination and India-side reporting | Fee on quote after a free review |
| UAE licence, registration, attestation and visa fees | At actuals. Amounts vary by emirate, free zone and activity, and we confirm them in writing before you pay |
| Related services with a confirmed fee | US company setup: LLC from ₹49,999, Delaware C-Corp from ₹49,999, US bank account assistance from ₹4,999 |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 27 September 2026.
Where UAE setups go wrong
- Buying a free zone package first, then finding the licence does not cover selling into the UAE market.
- Assuming the UAE is tax-free. Corporate tax applies to financial years beginning on or after 1 June 2023.
- Treating Small Business Relief as automatic. It is an election, a simplified return is still filed, and a qualifying free zone person cannot use it.
- Assuming a free zone means 0 percent. The Qualifying Free Zone Person rate depends on conditions in the decisions, not on the zone's brochure.
- Not registering for corporate tax because the entity is already registered for VAT.
- Remitting the money before speaking to the AD bank, so the Form FC reporting is late and a late submission fee applies.
- An individual funding a holding-only vehicle under the Liberalised Remittance Scheme, which the overseas investment rules do not permit.
- Forgetting the Annual Performance Report until a bank asks for it.
- Thinking a UAE company makes the income untaxable in India while the founder is still resident in India.
Why founders use Regikart
- Reviewed by a Chartered Accountant who works on cross-border structuring, not a licence reseller.
- Both sides in one engagement. The UAE licence and tax registrations, and the Indian reporting with your AD bank.
- We state our role accurately. We prepare the Form FC pack and coordinate with the bank. The reporting goes to the RBI through the bank, and we do not claim to issue the unique identification number.
- No invented fees. UAE licence, visa and government charges are confirmed in writing before you pay, and we publish nothing we have not verified.
- Connected services: US company setup, Form 15CA and 15CB, ITR for NRIs, net worth certificate for a visa and trademark registration for the Indian mark.
- 250+ clients served from Kolkata, Delhi and Bengaluru.