Dear Sir, 

Two Indian residents have incorporated a company in Dubai. Will there be any tax liability on these persons on income earned by company in Dubai ?

How these persons can take the money from this offshore company & what will be the tax treatyment of that ?

What are the disclosure reqment in personal income tax return, regarding this company ?

Thanks & Reg

CA. Anil Goel

Dear Anil,

1) Company is a separate entity and hence the Indian residents are not liable for tax on profits earned by company.

2) They can take the money from company in the form of Dividend. Dividend received is taxable in India. Withholding tax is applicable subject to maximum of 10% as per DTAA between India and UAE.

3) Both shareholders are required to disclose their shareholding in schedule FA of ITR.

Kind Regards
TaxReply.com

There are no taxes on dividends in Dubai, so there may not be any withholding of taxes on dividends.

Further, the dividends received would be fully taxable to individuals.

Regards

Dear Sir, 

Thanks for your clarification. However, what will be the tax liability of this company in India, if its POEM is in India as both the directors are indian residents and most of the Board meeting will also be held in India ?

Thanks & Regards

Anil