Does Dubai Has A ‘Golden’ Visa For The Indian Startup Founders?

Almost three months ago, a Bangalore-based mid-staged fintech start-up’s originator was advised by his tax adviser to consider moving to the Venice of the Gulf, Dubai on a “golden visa.” The adviser suggested that the move of the entrepreneur would make massive savings on tax pay-outs. However, the originator of the start-up company refused to do so at the beginning of the suggestion. He believed that he needs to be in India to keep his start-up running smoothly. On the other side, several tech founders are en route toward the hotspot of “Dubai.”  

In a media report, the budding entrepreneur said, “Some unicorn founders in my network have applied for the golden visa. Tax advisory firms here [in India] are asking founders to move to Dubai, especially if they are close to liquidity and exits.” Speaking to the media, the entrepreneur wanted him to be anonymous, as he does not wish his investors to feel he has the option to leave India and abandon his start-up approach. 

En route to Dubai

According to the entrepreneur, almost half a dozen prominent Indian tech start-up founders and several investors have relocated to Dubai, which is quickly turning into India’s proxy tech capital, according to several investors, lawyers, and consultants.

Lured by tax reliefs and a friendly policy environment, most of these individuals have emigrated using the golden visa program, which offers five- and 10-years residency to investors, entrepreneurs, researchers, medical professionals, and outstanding students, among others.

As per a government report, since, it was launched in 2019, at least 44,000 people have moved to Dubai on a golden visa.

Tax Adviser on Relocating to Dubai

An independent start-up and tax adviser, Anoush Bhasin said, “We are going back to the internet-boom era, where most of the tech founders or anybody who thought they could create a good product moved out [of India] — they thought a different country could be more conducive to creating a good start-up, getting funding, and just the overall ecosystem being friendly towards them.”

“India is again being seen as a talent. It shouldn’t have been the case this time, but since the government hasn’t been friendly, India is again seen as an outsourcing hub,” he added.

Stating the figures, he said that approx. 50 founders in the cryptocurrency and Web3 spaces have relocated to Dubai.

Relocation: Long-term impact on India

This trend, if it continues, could have a long-term impact on India, especially the country’s start-up ecosystem that was slowly built over the last decade and became one of the top 20 global startup hubs in the world. 

“We will see the continuation of value creation by Indians outside of India; the people and domiciles will not be in India, so the tax collections on income and listings can reduce,” said Pranav Pai, founding partner, and chief investment officer at early stage VC firm 3one4 Capital, which has seen some of its portfolio founders also move out recently. 

“Last five years, India has seen a lot of VC and PE money come; that money stops coming to India because the companies are outside. Then, from a forex perspective, we are also losing the inflow of billions of dollars,” Mr. Pai added.

To establish themselves as attractive destinations for tech companies, the Dubai and Abu Dhabi governments have been actively reaching out to Indian entrepreneurs and offering them free or subsidized office spaces and investments in their companies.

Several Indian entrepreneurs, who have a golden visa or have shifted base are not willing to talk about it openly, fearing retribution from the Indian government, said people from the industry. 

Among prominent Indian entrepreneurs who multiple sources said have shifted base to Dubai are ed-tech unicorn Byju’s founder and CEO Byju Raveendran, and SoftBank-backed Oyo’s founder and CEO Ritesh Agarwal. Both companies denied these moves.

“The founders have long-stay visas from multiple countries and have no intent to shift base from India,” Byju’s spokesperson said in a media report. An Oyo spokesperson said, “Ritesh also does not have any assets or tax payouts in the UAE. OYO of course has investments in multiple countries around the world, including UAE, and is a prominent enabler of UAE-India ties. Oyo and Ritesh are proud Indian corporate and individual citizens and will remain that way.”

Reasons for Relocations

One of the prominent reasons for this trend is India’s unfriendly regulations around cryptocurrencies and Web3. India currently charges a 30% tax on any income generated from cryptocurrencies and starting in July it will also levy a 1% charge on the transfer of digital assets — the first of its kind in the world. Indian entrepreneurs have also been dealing with the issues of double taxation on employee stock ownership plans (ESOP) — both at the time of exercising and liquidation — which can make it hard to attract and retain talent.

In comparison, the UAE does not levy any income tax on individuals. Also, Dubai has created a more conducive environment for crypto startups, with the government, in March, having approved a law for digital assets and created the Dubai Virtual Assets Regulatory Authority. Queries sent to Digital Dubai did not elicit a response at the time of publishing this story.