Planning to pay 0 tax by setting up in Dubai? Coinswitch co-founder calls it a trap

Thinking of starting a company in Dubai to avoid paying income tax in India? That plan might not be as clever as it sounds. In fact, it could land you in trouble.Ashish Singhal, co-founder of CoinSwitch, has sounded a clear warning to Indian entrepreneurs who may be considering setting up companies in Dubai to take advantage of its tax-free status. He said that while Dubai does not tax personal income and even gives out residency certificates, it doesn't mean Indian residents can use this as a shortcut to dodge taxes back home.advertisementHe wrote on LinkedIn, "Pay 0 tax by setting up in Dubai? Yup, that's not going to work if you live in India. Here's the truth no one says out loud. Yes, UAE doesn't tax income (personal income). Yes, you can get a residency certificate. Yes, it looks clean on paper."
"But if you're sitting in India, sending proposals from India, delivering work from India, closing deals from India, then it doesn't matter what your invoice header says. Your Dubai company might as well be an Indian one — because the tax department already sees it that way. This isn't a loophole. It's a trap," he added.
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Singhal explained that setting up a firm in Dubai comes with tempting benefits. No income tax, easy paperwork, and a clean company structure on paper. But here's the catch: if you live and work from India, that Dubai setup could still be treated as an Indian business by the tax authorities.Singhal pointed out that if you are sending emails, delivering services, or closing deals from India, even though your invoice has a Dubai address, it won't fool the tax department. Over time, the Indian government has tightened its grip on such arrangements. "And it's already patched from three different directions — legal, operational, and data-sharing," he further wrote.He added that if you have foreign business holdings, you're required to declare them when you file your income tax return.India's legal requirements mandate the disclosure of foreign assets, and under international agreements, the UAE shares financial data with India. This level of transparency significantly reduces the opportunity for tax evasion.Singhal's insights come at a time when compliance frameworks are expanding, and global data sharing is intensifying. He highlights that the chance to exploit such loopholes is shrinking fast, a sentiment reinforced by the emerging norms of 2025.The message from Singhal is unequivocal; while setting up operations offshore might seem enticing, the reality is fraught with legal implications. So, if you're planning to use a Dubai company as a tax shield while living in India, it's time to rethink. The taxman already knows the game—and this time, the rules are not in your favour.Must Watch

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