Indian Expats in Dubai Panic Over Government’s New Tax On Global Income

Indian expats or businessmen living in Dubai are now required to pay tax on their global income, as per the newly launched FAST-DS (Foreign Assets of Small Taxpayers-Disclosure Scheme). Due to new schemes, business owners are reevaluating their tax strategies as they are required to make the declarations until December 31, 2026.

Businesspeople who have established their businesses in the UAE to benefit from its favourable tax environment and expand their investments with greater flexibility are now raising concerns over the Indian government’s latest tax measures.

According to sources, some Indian expats are becoming increasingly concerned about the new tax structures, fearing that they could limit the flexibility they currently enjoy in operating businesses and managing investments in the region.

Earlier, Indian businesspeople in Dubai benefited from the region’s favourable tax environment and operated their businesses and investments with greater flexibility.

However, the new scheme has sparked panic among some Indian expats and business owners, prompting them to reassess their plans amid concerns over the potential impact on their investments, business operations, and future expansion in the region.

Notably, the FAST-DS scheme categorises taxpayers into two broad groups, depending on whether the foreign assets or income were previously declared and taxed in India.

Under the first category, individuals who failed to disclose their foreign income or assets to the Indian government and subsequently accumulated assets through foreign investments, with the total value not exceeding Rs 1 crore, would be required to pay 30 per cent tax along with an additional 30 per cent amount as a penalty.

This effectively takes the total liability to 60 per cent of the value of the undisclosed assets. For instance, if the total value of the undisclosed foreign assets is Rs 1 crore, the taxpayer could face a combined tax and penalty liability of Rs 60 lakh.

The second category applies to individuals who have complied with their tax obligations in India and paid the applicable taxes but failed to disclose information about assets subsequently held or acquired overseas. In such cases, taxpayers with aggregate foreign assets not exceeding Rs 5 crore can regularise the disclosure by paying a fixed fee of Rs 1 lakh.

For instance, an individual holding Rs 1 crore worth of shares in the Singapore market, Rs 2 crore invested in Canadian real estate and another Rs 2 crore in overseas investments would fall within the Rs 5 crore threshold, subject to meeting the other conditions of the scheme.

The distinction between the two categories is significant, as taxpayers who had already paid their taxes but failed to report their foreign assets face a substantially different financial implication from those who had failed to disclose taxable foreign income or assets altogether.

All these developments have left Indian expats increasingly worried about their business establishments in Dubai, with many now reassessing their investment plans and considering how the new tax requirements could affect their businesses and financial interests in the UAE.