Below is a concise, practical cross‑border business consulting brief for doing business between the United Arab Emirates (UAE) and India — structure choices, tax & regulatory highlights, compliance / operational checklist, common pitfalls, estimated timelines & costs, and recommended next steps.

High‑level summary

• You can do business between India and the UAE via (a) a UAE mainland company or branch, (b) a UAE free‑zone company with a mainland branch/representation, (c) an offshore UAE entity (limited scope), or (d) operate from India and use a liaison/branch or distributor in the UAE. Free‑zones give 100% foreign ownership and streamlined setup; mainland presence gives direct access to UAE onshore markets. (meydanfz.ae)
• Tax coordination: India and the UAE have a Double Taxation Avoidance Agreement (DTAA) and have applied MLI changes; that treaty governs residence, withholding tax relief and helps prevent double taxation — but specifics (e.g., withholding rates, tie‑breaker rules, permanent establishment tests) must be checked for each transaction. Corporate tax, VAT and local rules apply differently depending on where income is sourced. (incometaxindia.gov.in)
• Key operational issues include corporate structure, visa & workforce rules, banking and payments, customs and logistics for goods, transfer pricing and VAT/GST treatment for cross‑border supplies, and regulatory approvals for sector‑specific activities (financial services, insurance, defense/space, telecom, etc.). (meydanfz.ae)

1. Which legal structure to pick (quick guide)

• UAE Free Zone entity (FZ‑LLC / FZE / FZCO)
  • Pros: 100% foreign ownership, streamlined digital setup, tax incentives for qualifying income, simple shareholder rules. Good for export, services, holding companies, digital businesses. Some free zones now allow easier access to the mainland via branches. (meydanfz.ae)
  • Cons: Historically restricted direct onshore trade (but rules are changing); separate accounting for free‑zone vs mainland required.
• UAE Mainland company (LLC, branch)
  • Pros: Direct trading in UAE market, ability to contract with government and local entities.
  • Cons: Historically required local sponsor for some structures (many sectors now permit 100% foreign ownership in UAE), office space requirements and mainland compliance. (emirabiz.com)
• Branch of Indian company in UAE
  • Pros: Easier link to Indian parent; useful for representative or commercial presence.
  • Cons: Branch has no separate legal personality (depends on parent); local licensing required.
• India presence options: private limited company, liaison/representative office, branch/project office (specific rules apply for foreign companies and sectoral FDI caps). Recent policy changes have liberalized some sectors for FDI — sector checks are essential. (Reuters.com)

2. Key tax & compliance points (high‑impact items you must review)

• DTAA and residency: The India–UAE DTAA reduces double taxation and sets withholding rates; residency and permanent establishment (PE) tests determine where profits are taxed. Always confirm treaty text for the particular year of income. (incometaxindia.gov.in)
• UAE corporate tax / Free‑zone rules: UAE has corporate tax rules; many free‑zones offer 0% on qualifying income but conditions and mainland branch rules affect tax treatment. Recent UAE policy updates have improved free‑zone to mainland access — confirm the free‑zone’s tax status for your activity. (meydanfz.ae)
• India taxation: Indian resident companies are taxed on worldwide income; non‑residents are taxed on India‑sourced income. Transfer pricing rules apply to related‑party cross‑border dealings. Any rep office/branch in India will have specific tax reporting and withholding obligations. (incometaxindia.gov.in)
• VAT/GST and cross‑border supplies: UAE VAT (standard rate historically 5%) and Indian GST have different place‑of‑supply rules — whether a service or goods supply is taxable in India or UAE depends on detailed rules (type of supply, where supplier/recipient is located, where services are performed). Verify treatment for digital services, software, royalties and B2B vs B2C supplies. (meydanfz.ae)
• Withholding taxes: DTAA typically reduces withholding rates on dividends, interest and royalties but conditions apply (beneficial ownership, documentation). Use correct paperwork (tax residency certificate, Form 10F or local forms) to claim treaty benefits. (incometaxindia.gov.in)

3. Practical operational checklist (step‑by‑step)

• Pre‑launch
  1. Define activities and markets: export only, UAE local sales, India sales, or mixed. This determines legal form and licenses.
  2. Sector/FDI check: confirm any sectoral approvals (finance, insurance, defense/space, telecom). India has evolving FDI rules in sectors like space and insurance — check up‑to‑date notifications. (Reuters.com)
  3. Choose jurisdiction (which Emirate / which free zone) based on target customers, logistics and local incentives.
  4. Prepare company documents (passport copies, proof of address, MoA/Shareholders, business plan).
• Setup (UAE)
  1. Reserve trade name, obtain license, register company in free zone or mainland authority.
  2. Open corporate bank account (banks require KYC, beneficial owner details and often in‑person authorization).
  3. If you need staff in UAE, apply for visas and work permits, secure office space (virtual desk or physical).
• Setup (India)
  1. Register company / branch / liaison as per Companies Act and RBI rules (if foreign entity investment or branch).
  2. GST registration (if taxable supplies in India), PAN and TAN for tax withholding obligations.
• Ongoing compliance
  • Annual accounts, statutory audits, corporate tax filings, VAT/GST filings, payroll and social contributions, transfer pricing documentation if applicable.
  • Maintain separate accounting for free‑zone vs mainland operations where required. (meydanfz.ae)

4. Timelines & ballpark costs (typical ranges)

• UAE free‑zone company: setup time from same‑day to 1–4 weeks (depends on free zone and documentation). Typical initial government & license fees vary widely: small service trading license often USD 3k–12k first year (including registration, license, visa quota and flexi‑desk office) — depends on free zone and service. Bank account opening may take additional 1–6+ weeks. (meydanfz.ae)
• UAE mainland company: 2–6 weeks, higher costs for office space and certain approvals; local approvals vary by activity. (emirabiz.com)
• India company incorporation: 1–4 weeks for a new private limited company; additional registrations (GST, professional tax, shops & establishment, PF/ESI) take extra days–weeks. Costs depend on professional fees and capital structure — typically low government fees but professional advisory and compliance costs apply. (Reuters.com) (These are indicative — obtain quotes from chosen free zone authority / registered agent and local accountants.)

5. Common pitfalls & risk areas

• Assuming treaty relief applies automatically — you must supply proper documentary evidence to claim DTAA benefits. (incometaxindia.gov.in)
• Not confirming whether free‑zone activity is allowed to trade directly into mainland customers (rules changed in some Emirates; check local free zone & DET lists). (Bestaxca.com)
• Banking delays due to KYC and sanctions screening — opening a UAE business account can take longer than company registration.
• Transfer‑pricing and permanent establishment risk when management decisions or sales activity are effectively carried out in the other jurisdiction — this can create unexpected tax liabilities.
• Sectoral regulatory approvals in India (e.g., insurance, defense/space, telecom) — FDI caps and approval routes change; always verify current sector rules. (Reuters.com)

6. Recommendations & next steps (practical)

1. Decide target market(s) and primary activity (trading goods, services, holding IP, digital services, financial services).
2. Choose UAE jurisdiction (which emirate / which free‑zone vs mainland) based on customer access, visas required, logistics and banking relationships.
3. Retain a local UAE company formation agent and bank‑facing advisor to get accurate fee/timeline quotes and to assist with bank introductions.
4. Engage an India chartered accountant / tax advisor to:
   • Confirm whether Indian permanent establishment / transfer pricing issues will arise,
   • Prepare to claim DTAA benefits (residency certificates, documentation),
   • Advise on GST treatment for cross‑border supplies.
5. Prepare standard contracts (service agreements, sales contracts, master service agreements) reviewed by legal counsel in both jurisdictions to handle governing law, dispute resolution, taxes and withholding.
6. Budget for 3–6 months of working capital to cover setup, bank delays, visas, and initial operations.

Seven most‑important documents you will need (initial)

• Passports and proof of residence for shareholders and directors.
• Business plan and activity description.
• Memorandum & Articles of Association / Shareholders agreement.
• Professional CVs (for license categories requiring professional licenses).
• Proof of registered office (lease or flexi desk agreement).
• Bank KYC / beneficial owner declarations.
• Tax residency certificate (when claiming DTAA relief). (meydanfz.ae)

7. If you want a short, practical engagement I can provide (examples)

• 30–minute strategy call to select jurisdiction & structure (deliverable: 1‑page recommended structure and checklist).
• Full setup project management (fee estimate after I know the activity & jurisdictions) — includes entity registration guidance, coordination with formation agent, basic contract templates, and introductions to tax advisors in India/UAE.

Final notes & caution

• Many rules (FDI caps, free‑zone to mainland access, corporate tax details, VAT/GST guidance) have changed in recent years and continue to evolve. The DTAA text and local tax measures are binding but operational guidance and administrative practice change — therefore before you finalize anything, get up‑to‑date written confirmation from (a) the specific UAE free zone or mainland licensing authority you intend to use and (b) an Indian tax advisor for cross‑border tax treatment. (incometaxindia.gov.in)

If you’d like, tell me:

• What business activity you plan (goods, services, digital, holding/IP, finance),
• Whether you want UAE to be headquarters or a trading hub,
• An approximate budget and expected first‑year revenues,

and I’ll give a tailored recommended entity structure, likely jurisdictions (which emirate/free zone), an estimated timeline & cost breakdown, and a short “next steps” action list you can implement immediately.