The GCC tax landscape has transformed since 2018. The UAE introduced Corporate Tax in 2023. Saudi Arabia's VAT rate doubled to 15%. Bahrain expanded its VAT framework. For NRI business owners, Indian companies with GCC subsidiaries, and GCC businesses with India operations — navigating these overlapping obligations requires a practice that understands both sides of the relationship.
GCC taxation does not exist in isolation for most of our clients — it intersects with Indian income tax, GST on import of services, DTAA positions, repatriation structuring, and transfer pricing. We advise the full relationship, not just one side of it.
The UAE's Federal Corporate Tax — effective for financial years commencing on or after 1 June 2023 under Federal Decree-Law No. 47 of 2022 — introduced a 9% corporate tax rate on taxable income above AED 375,000. For businesses that operated under the assumption of a tax-free regime, the compliance requirements, exemption determination, and transfer pricing obligations under the CT framework represent a significant transition. VAT has been in place since January 2018 at 5%. Together, these create a dual compliance obligation that most GCC businesses are still calibrating.
Saudi Arabia operates a dual tax system — Zakat (at 2.5% of the Zakat base) is levied on Saudi and GCC nationals' share of a business, while corporate income tax at 20% is levied on the foreign shareholder's share. VAT was introduced in 2018 at 5% and doubled to 15% in July 2020 — one of the highest VAT rates in the region. Withholding tax applies to payments made to non-residents, including dividends, royalties, technical service fees, and management fees — making Saudi operations of Indian companies a significant WHT exposure area.
Bahrain remains the most tax-advantaged jurisdiction in the GCC for most businesses — there is no general corporate income tax (with the exception of oil and gas operations), no withholding tax on most payments, and no personal income tax. However, Bahrain's VAT rate was increased to 10% effective 1 January 2022, and the National Bureau for Revenue (NBR) has significantly strengthened compliance monitoring. VAT registration, return filing, and audit readiness are now substantive obligations — not administrative formalities. Bahrain's bilateral investment treaty network and tax transparency commitments also create reporting obligations for businesses with cross-border structures.
| TAX TYPE | UAE | SAUDI ARABIA | BAHRAIN | INDIA CROSS-BORDER NOTE |
|---|---|---|---|---|
| Corporate / Business Income Tax | 9% (above AED 375K) 0% QFZP (conditional) | 20% on foreign shareholder share 2.5% Zakat — Saudi/GCC share | Nil (general) Exception: oil & gas | UAE CT paid may be eligible as foreign tax credit under Section 90/91 of ITA in India — subject to DTAA and ordinary credit rules |
| VAT / Indirect Tax | 5% standard rate | 15% standard rate | 10% (from Jan 2022) | Indian companies supplying to GCC — assess whether supply is subject to GCC VAT; GCC companies paying Indian vendors — Indian GST RCM may apply on import of services |
| Withholding Tax — Dividends | Nil | 5% | Nil | Indian dividend recipient may be liable to tax in India; DTAA exemption / reduced rate may apply depending on treaty structure and shareholding |
| WHT — Technical Service / Mgmt Fees | Nil | 5–20% depending on nature | Nil | Indian recipient of Saudi WHT-deducted fees — foreign tax credit claim in India. Indian payer of UAE/Bahrain fees — Indian TDS under Sec 195 still applies regardless of zero GCC WHT |
| WHT — Royalties | Nil | 15% | Nil | India–Saudi DTAA reduces royalty WHT from 15% to 10% for beneficial owner with >10% shareholding. Treaty benefit requires Tax Residency Certificate from Saudi authority. |
| Transfer Pricing | Mandatory — CT Law Article 34–36 | Mandatory — ZATCA TP rules, SAR 6M threshold | Limited — BEPS Action 13 commitments | Indian parent with GCC subsidiaries — Indian TP documentation (Form 3CEB) required for all international transactions above INR 1 crore; GCC TP documentation required separately |
| Personal Income Tax | Nil | Nil | Nil | GCC-based NRI income — potentially taxable in India depending on residential status under FEMA and Income Tax Act. NRI status and 182-day rule must be assessed every financial year |
Start with a free scope discussion — we map your obligations across GCC and India before you commit to anything.