{"id":8611,"date":"2025-01-28T10:11:31","date_gmt":"2025-01-28T10:11:31","guid":{"rendered":"https:\/\/arnifi.com\/blog\/?p=8611"},"modified":"2025-01-28T10:26:28","modified_gmt":"2025-01-28T10:26:28","slug":"double-taxation-agreement-between-uae-india","status":"publish","type":"post","link":"https:\/\/arnifi.com\/blog\/double-taxation-agreement-between-uae-india\/","title":{"rendered":"Double Taxation Agreement Between UAE & India"},"content":{"rendered":"
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Overview<\/h2>\n\n\n\n

As an Indian, if you\u2019re starting a business in UAE you have to pay taxes on the income you generate or taxes on the capital gains. But paying the taxes in both countries might not sound fair. To avoid such a situation the Income Tax Department of India has signed the Double Taxation Agreement between UAE & India. In this article, we\u2019ve clearly explained the DTA between both countries, what types of taxes are covered in this treaty, and how the tax rates differ on income gained through capital, interests, dividends, royalties, and more.<\/p>\n\n\n\n

Double Taxation Agreement – UAE & India – Explained<\/h2>\n\n\n\n

Article 25 of the India-UAE DTAA explains how to avoid double taxation on income or capital earned in both countries. Here’s a simple breakdown:<\/p>\n\n\n\n

For Indian Residents<\/strong> – If an Indian resident earns income or owns capital in the UAE and pays taxes there, India will reduce their Indian tax liability by the amount of tax already paid in the UAE. However, this reduction cannot exceed the amount of Indian tax due on that same income or capital.<\/p>\n\n\n\n

For UAE Residents –<\/strong> If a UAE resident earns income in India and pays Indian taxes, the UAE will reduce the person’s UAE tax by the amount of tax paid in India.
This system ensures that taxpayers are not taxed twice on the same income or capital in both countries, making cross-border investments and activities smoother.<\/p>\n\n\n\n

Importance of Double Taxation Agreement – UAE & India<\/h2>\n\n\n\n

The primary objective of the DTAA between the two nations is to support developmental goals and eliminate double taxation. From the UAE’s perspective, the agreement protects against non-commercial risks such as expropriation, freezing of assets, nationalization, and sequestration. It also ensures prompt and equitable compensation for investors in cases of expropriation in the public interest, without discrimination.  <\/p>\n\n\n\n

For India, the DTAA with the UAE has significantly enhanced the potential for foreign investment, driving economic growth. As one of India’s key trade partners, the UAE has leveraged the agreement to simplify investment in India. This has led to increased capital inflow, technology transfer, and job creation, further strengthening economic ties between the two countries.<\/p>\n\n\n\n

Types of Taxes Covered in DTAs – UAE & India<\/h2>\n\n\n\n

All taxes imposed on total income, capital, or elements of income or capital, including taxes on gains from the alienation of movable or immovable property, shall be considered income and capital taxes. Under \u2018Article 2\u2019 the Double Taxation Agreement between UAE & India covers the following taxes:<\/p>\n\n\n\n

In the case of UAE – U.A.E Taxes<\/p>\n\n\n\n