A steady stream of Indian Web3 founders has moved to Dubai since 2022, drawn by a licensed regulator, no personal income tax and a banking system that will deal with crypto businesses. Many of those moves have worked. Some have produced a Dubai licence sitting on top of an Indian tax problem, because the Indian exit was never planned. This note is the checklist we use, in the order the questions should be answered.
1. Which UAE framework
| Business | Framework | Notes |
|---|---|---|
| Exchange, broker-dealer, custodian, lending platform, OTC desk, token issuer serving the public | VARA licence (Dubai, outside DIFC) | Two-stage process — initial approval, then full licence within twelve months; minimum paid-up capital by activity, a UAE-resident compliance officer and MLRO, an office, and ongoing reporting. Budget six to twelve months and a substantial compliance cost |
| Institutional exchange, fund manager, custodian wanting a common-law regulator | ADGM (FSRA) or DIFC (DFSA) | Higher bar and cost; recognised by international banks and investors; the usual home for funds and for businesses raising institutional capital |
| Protocol development studio, proprietary trading, advisory, DAO tooling, Web3 gaming, businesses not serving the public with regulated activities | DMCC Crypto Centre or another free zone with a crypto-related activity | A free zone company with the appropriate activity on the licence; visas, office and bank introductions; no regulatory licence where the activity is not a regulated one — but the boundary must be checked carefully, because VARA's activity list is wide |
2. What the UAE actually taxes
A UAE company earning from crypto trading, exchange fees, development services or token sales pays corporate tax at 9% on taxable income above AED 375,000. This is not qualifying free zone income, so the 0% rate does not apply to it. Transfers and conversions of virtual assets are exempt from VAT; fees for exchange, custody and advisory services are subject to VAT at 5% where the customer is in the UAE, and zero-rated where the customer is abroad. Individuals pay no personal income tax on their own crypto gains. Corporate tax registration, audited accounts and a return within nine months of year-end apply from the first year.
3. The founder's Indian residency in the year of the move
You are non-resident in India for a financial year only if you were in India for fewer than 182 days (for a citizen who leaves India for employment, the alternative 60-day test is relaxed to 182 days, so the 182-day count is what matters); the 120-day rule and the deemed-residency rule for Indian citizens with Indian income above ₹15 lakh must both be checked. Move in April and the first year is clean; move in November and you are almost certainly resident for that whole year, with worldwide income, including UAE salary and any tokens sold, taxable in India. Plan the date, keep the travel record, and give the Indian exchange and bank your changed status.
4. Place of effective management of the new company
If the Dubai company is run by founders who still sit in Bengaluru or Mumbai — decisions on the roadmap, hiring, treasury and token sales taken there — its place of effective management is in India, and it is an Indian resident taxed at the foreign-company rate on its worldwide income. The relocation has to include the people who decide. A founder in Dubai with genuine authority, a UAE board that meets there, the treasury wallets and bank mandate controlled from the UAE, and the core team on UAE contracts are what the position rests on. Development staff can remain in India in an Indian subsidiary paid at cost-plus; the decision-makers cannot.
5. Moving the assets: tokens and IP
Tokens in a founder's or the Indian company's wallet do not move to the UAE entity for free. A transfer to the new company is a transfer of a VDA for Indian tax purposes, taxed at 30% on the gain over cost at the date of transfer — and for an Indian company, a transfer to a foreign affiliate must also be at arm's length under transfer pricing. Contributing the tokens as capital does not avoid this. The same is true of intellectual property — code, brand, protocol — held by an Indian entity: its transfer abroad is a taxable transfer at fair value, and Indian withholding and transfer pricing rules follow. The cheapest time to decide where the IP and treasury will live is before they have value.
6. Funding, ODI and disclosure
An Indian resident founder's shares in the UAE company are overseas direct investment: Form FC and a UIN through the AD bank before the first remittance, the share certificate within six months, an APR every December. A founder investing under the Liberalised Remittance Scheme may hold equity only, up to USD 250,000 a year, with 20% TCS above ₹10 lakh. Once the founder is non-resident, new investment from abroad is free of these rules, but the existing holding stays reportable. Every resident family member with an interest — a co-founder still in India, a parent on the board — files Schedule FA each year.
7. Indian users
A Dubai platform serving Indian residents takes on Indian obligations regardless of its licence: registration with FIU-IND as a reporting entity, deduction of 1% TDS under section 393 (194S of the 1961 Act) on users' transfers, and from 2026 transaction reporting to the Indian tax department. Several large offshore exchanges have registered; those that have not have been blocked. A Web3 business that intends to serve India should build the Indian compliance function alongside the UAE one, not after the first notice.
The sequence that works
Decide the UAE framework and the founder's move date together; incorporate and license in the UAE with real substance; transfer tokens and IP under a documented, taxed and arm's-length arrangement rather than an informal one; complete the ODI filings; and set up the Indian subsidiary, if any, as a cost-plus service provider with transfer pricing documentation. Done in that order, the move gives a founder a licensed business in a jurisdiction that wants it and an Indian file that will survive scrutiny.
Both sides in one engagement
We prepare the business plan and financials, incorporate the UAE entity and coordinate the regulatory application with licensed UAE advisers, and handle the founder's residency planning, the token and IP transfer, ODI and Schedule FA from Mumbai. Crypto and digital assets or contact us.
Tax, GST and business setup advisors — Mumbai and Thane. Contact us to discuss your situation.
Related articles
- Setting up in Saudi Arabia from India: MISA licence, ZATCA, Saudization and the regional headquarters programme
- GST Council, 8 October 2026: what the 57th meeting means for small businesses and exporters
- Setting up a manpower or recruitment company in the UAE from India
- GST for freelancers and consultants in Mumbai and Thane: when registration becomes compulsory, export of services and the LUT
- DIFC vs ADGM vs RAK ICC foundation: choosing by what you will hold
- How to register for GST in Mumbai and Thane: the steps, the documents and what goes wrong
- Tax audit due date extended to 21 October 2026; audited returns to 21 November
- Is your Dubai company taxable in India? The place of effective management test explained
- Overseas direct investment from India: Form FC, UIN, APR and the mistakes that lead to RBI compounding
- Crypto tax in India for FY 2026-27: the 30% rate, 1% TDS, the loss rule and Schedule VDA, with examples
- Selling property in India as an NRI: TDS on the full price, the Form 13 certificate and repatriating the money
- India tax and compliance update — September 2026
- Free zone or mainland in the UAE? The 0% qualifying income test explained for Indian exporters
- UAE foundations for Indian and NRI families: the FEMA and Indian tax questions to settle before you sign the charter
- NRIs in the UAE: do you need to file an Indian income tax return for FY 2025-26?
- Income tax return due dates for FY 2025-26 (AY 2026-27): who files by when
- GST changes every business should have adopted by now
- Setting up a UAE company from India: the complete checklist