Global tax deal to hurt Indians who moved trusts to the UAE

Global tax deal to hurt Indians who moved trusts to the UAE

Several rich Indians who moved family trusts and holding entities to Dubai and Abu Dhabi amid the Covid-19 pandemic are now reaching out to their advisers fearing additional taxes, following the new global tax deal of the Organisation for Economic Co-operation and Development (OECD) and UAE's plans to introduce more taxes.

After all major countries including the UAE signed OECD's global tax deal, the fear is that the country will introduce corporate tax of at least 15% across the board that will even apply to income of holding trusts and entities.

Many businessmen had created intermediary companies based in these countries so that the operations could be handled from there, and they could avail of tax benefits due to UAE's liberal tax regime.

Some of them had even started "creating fact patterns" so that they don't get stuck with tax and other regulatory issues. These fact patterns, highlighting historical transactions and structures, are aimed at demonstrating that the move was not undertaken to save taxes but due to other genuine reasons.