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Why are Indian Tech Startups Relocating to UAE?

In the last few years, the UAE has emerged as the destination for tech professionals and entrepreneurs to startup and establish their companies, competing with more traditionally favored locations such as Silicon Valley.

The tech industry is booming in the UAE, as startups are attracting interest from international venture firms, including SoftBank Group Corp. and Sequoia Capital.

Recently a number of prominent Indian startup founders have relocated to the UAE, due to the many advantages including tax incentives, a startup-friendly business ecosystem, security, geographical proximity to India, and long-term visa options, such as the Golden Visa.

Dr. Saji Gopinath, CEO of Kerala Startup Mission (KSUM), told Arabian Business “When we invite some of the ‘potential’ start-ups to handhold them, they tell us that their dream ventures have already been taken off in Dubai and they have even signed lucrative contracts there.”

There are many contributing factors to the exodus of tech startups in India and the reasons why the UAE is the preferred base. Tax is one of the main factors, India currently has a personal income tax of 30% on income above 15,00,000 rupees ($19,300), which can go up to 42%, including a surcharge and a long-term capital gains tax of 10%–20%. Currently, the UAE has 0% tax on personal income and only 9% corporate tax will be introduced in 2023, which is very attractive to startup founders looking to relocate their business.

Also contributing to the boom of Indian tech startups relocating to the UAE are India’s current regulations on taxing cryptocurrencies, NFT’s, and other Web 3.0 related sectors. Recently India announced a 30-percent tax on the transfer of such assets as well as a 1-percent tax deduction at source (TDS) on every transaction. India’s regulations on cryptocurrency and other digital assets are on the opposite spectrum to the UAE’s view of the industry.

The UAE has actively been encouraging and positioning itself as a ‘global crypto hub’, according to a recent Reuters article ‘around 25% of Middle East millionaires already invest in some kind of crypto’. Doubling down even further, Dubai demonstrated its commitment to the digital economy with landmark regulatory advances in early 2022 in stark contrast to a more cautious approach by India.

The boom of Indian startups setting up shop in the UAE is likely to continue, without any setbacks for the foreseeable future, there are exciting opportunities ahead for many.

If you are interested in starting or relocating your startup business in the UAE, we are here to provide you with impartial advice on how to get established quickly and with ease. Simply contact us today for a complimentary consultation.


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