Cross-Border Structuring Across India, the UAE and the USA: A Practical Primer
A business moving profit across India, the UAE and the USA has to reconcile three different tax systems at once — India’s 22% (or 15% for new manufacturers), the UAE’s 9% (with a 0% band and free-zone regime), and a US anti-deferral tax whose effective rate rises to about 12.6% from 2026. Get the structure wrong and the same income is taxed twice.
The three headline positions
India taxes domestic companies at 22% (an effective 25.17%) under Section 115BAA, or 15% for eligible new manufacturers. The UAE charges 0% on the first AED 375,000 of taxable income and 9% above, with a 0% rate for Qualifying Free Zone Persons on qualifying income. The US taxes American-owned foreign subsidiaries currently under the GILTI/NCTI regime.
Where treaties do the work
The 1993 India-UAE DTAA caps cross-border withholding at 10% on dividends, 12.5% on interest and 10% on royalties. Layered against the US foreign tax credit, treaties and credits are what stop the same profit being taxed in two or three places — but only if residency, substance and beneficial ownership hold up.
Sequence matters
The order in which you place holding companies, operating companies and IP determines the combined rate. A UAE holding company can offer treaty access and a low rate; a US parent brings NCTI exposure; an Indian operating company brings a 22% or 15% rate plus transfer-pricing obligations. The right sequence is specific to each group’s facts.
Key figures
- India: 22% (eff. 25.17%) or 15% for new manufacturers (Section 115BAA guide)
- UAE: 0% up to AED 375,000, 9% above; 0% for Qualifying Free Zone Persons (UAE Government)
- US: GILTI/NCTI effective ~10.5% rising to ~12.6% from 2026 (EY)
- India-UAE DTAA: 10% dividends, 12.5% interest, 10% royalties
Frequently asked questions
How are groups across India, the UAE and the USA taxed?
Each jurisdiction taxes separately: India at 22% (or 15% for new manufacturers), the UAE at 9% with a 0% band and free-zone regime, and the US taxes American-owned foreign subsidiaries currently under the GILTI/NCTI regime. Tax treaties and foreign tax credits prevent the same income being taxed more than once.
Does a UAE holding company reduce tax for an India-US group?
It can, by offering treaty access under the 1993 India-UAE DTAA and a low headline rate, but only where residency, substance and beneficial-ownership requirements are met. A US parent still brings NCTI exposure that must be modelled separately.
By Vijay Dhawan, Managing Partner, LexVerge LLP. Last updated 2 July 2026. This article is general information, not tax advice; confirm the current position for your facts before acting.
