I read a lot of articles and blogs while browsing the internet, and while doing so, I discovered a tonne of blogs and articles written by Indian traders and Web 3. O startup businesses that have relocated from India to Dubai. After reading numerous blogs and watching numerous videos of traders who left India and relocated to Dubai, I wondered: "Why are these Indian traders and startups suddenly leaving India and moving to Dubai?" After all, they began their entire journey in India and have grown stronger, more well-known, profitable, and most importantly, have attracted a large number of Indian fans who follow them and use their professional services. What has suddenly happened to them, what sort of magic exists in Dubai, is there a tree that grows money, or does Dubai give money to foreigners and businesses that relocate there?
These were the questions that arose inside my mind initially, however, after observing these trends of relocating to Dubai I came to know that these people are relocating because of some defaults in Indian economic, and Fiscal rules. I am gonna elaborate on these points further by what I mean by defaults in Indian economic, and fiscal rules.(But before I start I am gonna clarify the point that this blog is not meant to insult or raise any kind of question against the traders or any other business entities that are shifting to Dubai, In this blog I will share some opinions of mine which are not meant to hurt anyone. And an answer to a question that I asked myself and now which I am Sharing with you all. So, take a Chill pill.)
So let’s start with ‘Why Traders are shifting to Dubai?’
1. Fiscal rules (Income Tax):India’s income tax system is one reason why traders are leaving India and shifting to Dubai. In India income above 10 lacs is taxed at a flat rate of 30%, yeah there is depreciation and deduction of tax but still you have to pay 30% tax which means if you earn an annual income of Rs.10 lac then you will have to pay a tax of Rs.3 lacs and if you earn Rs.1cr. as an annual income then you will have to pay Rs.30 lacs in taxes. Whereas in Dubai the concept of Income tax is completely absent which means Dubai is completely tax-free, yes there are taxes on other things, but not on income. All they need to do is to prove their active UAE resident status to gain tax exemption on their global income.
This alone is one of the main reasons why Indian traders are moving to Dubai and not only Indian traders but also traders from different countries are moving to Dubai because of its No income tax policy.Does this mean Dubai is completely Tax-free?
The answer is no Dubai is not completely tax-free It’s just disguised in the form of housing fees, visa costs, road tolls, car registration costs, and a bunch of other things. Apart from the above, UAE derives its income from oil and tourism, enough to not require an explicit income tax, corporate tax, value-added tax, etc.
2. Increase in People’s Interest:People's interest in Binary Options, Forex, and other forms of trading has significantly risen in India over the last few years. The interest of Indian audiences in this type of trading—forex, binary, and cryptocurrency—has significantly increased, and due to inconsistent, ambiguous, and unstable regulations of the Indian Government, there are many problems that Indian traders must deal with. The best illustration will be the rules governing the trading of cryptocurrencies. In reality, trading cryptocurrencies was probably considered illegal in India until 2022, even though the Central Government had not officially declared so. Nevertheless, people still used to view cryptocurrencies as illegal assets.
A 30% flat tax on cryptocurrency was suddenly announced by India in the Union Budget, which caused chaos among traders and investors who had been betting and investing in cryptocurrency. Cryptocurrency trading in India had been going on for years; there were large brokers, sponsors, etc., and hundreds of people were trading cryptos. In addition to this tax, 1% TDS will be charged on any cryptocurrency sales exceeding Rs 50,000 (or Rs 10,000 in some circ*mstances).
This is Why some of the Indian Web 3. O startups relocated to Dubai where one of the largest exchanges of cryptocurrencies known as Wazir X relocated to Dubai.[A significant development following the Indian government's imposition of a 30% crypto tax and 1% TDS [Tax Deducted at Source] on all virtual digital assets [VDAs] as of April 1 of the year 2022 is WazirX moving its headquarters to Dubai. Trading volume has decreased on all Indian cryptocurrency exchanges as a result of the tax imposition. Investors in cryptocurrencies from India are not permitted to deduct their losses from their gains from VDAs.]
3. Limited availabilities in India for forex trading:Forex trading is legal in India, but only for brokers and companies that have registered with SEBI. Similar to Zerodha, which only allows forex trading on the following four currencies: USD/INR, EUR/INR, JPY/INR, and GBP/INR. These SEBI-registered brokers have relatively low leverage, which reduces your reward and also results in a lack of volume. Most traders conduct their forex trading through offshore brokers, or brokers exempt from SEBI regulations.
Since there are only 4 currencies available, there is less forex trading on SEBI-registered companies/brokers. Additionally, there is less volume, volatility, and market movement overall, which makes it challenging for traders to survive because there is no supply and demand. Some other factors such as unlimited leverage, longer trading hours, and less market making and manipulation in forex markets unlike the stock markets motivate traders to relocate.
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Now, let’s talk about “Why Indian Web 3.0 startups are moving to Dubai?”
So, Dubai has emerged as a global hub for entrepreneurship, innovation, and technology. It offers an attractive business environment with minimal regulatory restrictions, tax incentives, and excellent infrastructure. This has made Dubai an attractive destination for startups looking to expand their operations and tap into the Middle Eastern market. Some unfriendly regulations of the Indian Govt. with the businesses of Web 3. O has affected them to leave India.
Secondly, Dubai provides easy access to funding and investment opportunities. The city is home to several venture capital firms, private equity firms, and angel investors who are keen to invest in innovative startups. Dubai also hosts several startup incubators and accelerators, providing startups with mentoring, networking, and training opportunities.
Thirdly, Dubai's strategic location makes it an ideal base for startups looking to expand their reach beyond India. The city is well-connected to major global markets and provides easy access to the Middle East, Africa, Europe, and Asia.
Lastly, Dubai's diverse population, multi-lingual workforce, and tolerant social environment make it an ideal location for startups looking to build a global team and cater to a global customer base.
These were the points why Web 3. O startups are leaving India. In summary, the favorable business environment, access to funding, strategic location, and diverse population make Dubai an attractive destination for Indian Web 3.0 startups looking to expand their operations and reach a global audience.
Now, let’s talk about What I feel about this whole topic of relocation?
As an equity trader, I don't feel the need to relocate to another country to invest or trade in Web 3.0 or Forex. Despite the current regulations in India not being friendly towards Web 3.0 trading and investing, I believe that the government will eventually support us in this area. Just like how they recently announced the digital currency of India in support of Web 3.0, I'm hopeful that they will take more steps to make it easier for us to invest and trade in this field.
I strongly feel that startups should not leave India as it is just the beginning of Web 3.0 in the country. It may take some time, but I believe that Web 3.0 will soon gain popularity in India. Therefore, we need to stay and continue to build our businesses here, especially since India has a diverse and growing market with immense potential.
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