GIFT City vs UAE Free Zone: Which IFSC Is Better for UK Firms? 

The choice between GIFT City India and UAE Free Zones has become increasingly relevant for UK firms structuring international operations in 2026. Each jurisdiction serves as an offshore financial gateway supporting cross border finance, fund management, treasury operations, and international trade structuring. UK firms weighing between these two are essentially choosing between a unified, India-centric international financial centre, and a multi-hub Middle East platform with newer federal tax rules.  

India’s nominal GDP crossed USD 3.5 trillion in FY 2024, as reported by the Ministry of Statistics and Programme Implementation, reinforcing its role in global capital flows. UAE Free Zones continue to play a central role in Middle East and Africa linked financial activity. UK firms evaluating these jurisdictions are therefore comparing strategic alignment rather than absolute advantage.

Regulatory Architecture and Oversight 

A clear understanding of the regulatory structure is crucial assess jurisdictional risk and compliance alignment. A central factor for UK decision makers is how clear and predictable the regulatory system is and how closely it aligns with home jurisdiction expectations.  

GIFT City India 

GIFT City operates under the International Financial Services Centres Authority, a statutory regulator established by the Government of India under the International Financial Services Centres Authority Act, 2019. This framework replaced the fragmented supervision with a single point of regulatory control. Key regulatory characteristics include: 

• Single regulatory for banking, capital markets, insurance, and fund management 

• Regulations notified under a parliamentary statute, providing legislative certainty 

• Policy coordination with the Reserve Bank of India and the Ministry of Finance 

• Standardised licensing and reporting formats for foreign entities 

According to the IFSCA Authority Report 2023-2024, the unified regulator model has reduced the approval timelines and improved consistency in supervisory outcomes.  

UAE Free Zones 

UAE Free Zones operate through multiple regulatory layers: 

• Zone level licensing authorities for incorporation, visas and commercial licensing.  

• Separate financial regulators for financial centres, with supervision of banking, capital markets and other financial services under specific local laws aligned with international standards.  

• Discrete dispute-resolution and compliance framework across zones and emirates, requiring careful legal mapping for cross border groups.  

This model is mature and well tested, but UK groups must manage differences in approach and documentation across location, whereas GIFT City India offers a single statutory authority and framework. 

Taxation Framework Comparison 

Tax structure is one of the important factors that UK firms must take into consideration when planning to expand their business. Both jurisdictions offer a pro-business tax framework, but the design and legal backings differ a bit.  

GIFT City India 

The Indian government introduced a dedicated IFSC tax regime through amendments to the Income Tax Act, 1961, supported by notifications issued by the central board of Direct Taxes. Some key features: 

• Units in an IFSC can claim a deduction of 100 percent of eligible business income for any 10 consecutive assessment year out of a 15-year block, starting from the year they begin operations, subject to the conditions in the section 80LA. 

• Specific exemptions from withholding tax on certain payments made to eligible IFSC units, where the unit has opted for the 10-year 80LA window and furnished the prescribed declaration (Form No.1) under the Central Board of Direct Taxes (CBDT) notification.  

• Separate benefits for non-residential on income from specific securities or financial products listed on IFSC exchanges, via provisions notified in the Income Tax Act and related rules.  

These incentives are grounded in primary legislation and official notification of the Government of India and the CBDT, giving UK groups a high degree of legal certainty around planning horizons.  

UAE Free Zone 

The UAE introduced a federal corporate tax framework which was effective from June 2023, as notified by the UAE Ministry of Finance. While Free Zone entities may continue to benefit from preferential rates on qualifying income, eligibility conditions and substance requirement now apply. For Free Zone entities: 

• A “qualifying Free Zone person” (QFZP) meeting substance and other conditions can continue to benefit from zero percent corporate tax on “qualifying income” as defined in Cabinet Decision No. 55 of 2023 and Ministerial Decision No. 139 of 2023 

• Non-qualifying income, or failure to meet substance and other criteria, can result in appliance of the standard federal corporate tax rates on taxable income.  

For UK firms evaluating long term certainty, the legislated exemption framework in GIFT City India provides better clarity, particularly for India or South Asia focused strategies.  

Market Access and Strategic Alignment 

Market Access and Strategic Alignment 

Access to the market determines whether an IFSC can serve as a strategic hub or can purely be an administrative base.  

GIFT City India 

GIFT City in India is explicitly designed to intermediate international financial flows linked to Indian and global assets through a foreign-currency platform. Policy measures by the Ministry of Finance and IFSCA have progressively widened permitted activities include: 

• International banking and trade finance in foreign currency, including facilities linked to India-related cross-border trade and investment.  

• Fund management, portfolio management services and alternative investment funds targeting foreign and non-resident investors.  

• Aircraft and ship leasing, global in-house centres and other treasury, risk-management and support functions with an international focus. 

According to the Ministry of Finance, IFSC units can access Indian markets without being treated as onshore entities, allowing operational flexibility while remaining compliant.  

UAE Free Zone 

UAE Free Zones function as regional bases for Middle East, Africa and, to some extent, South Asia, offering connectivity, logistics and established expatriate ecosystem. Their strategic role for UK firms typically includes: 

• Serving as Middle East treasury and holding company platform under UAE corporate and tax rules 

• Hosting regional distribution, trading and service operations directed at Gulf and African markets. 

Legal and Dispute Resolution Environment 

India operates under a common law system with constitutional safeguards, something UK legal and compliance teams are generally familiar with. For GIFT City: 

• The Government of Gujarat and relevant Indian authorities have provided for dedicated institutional mechanisms such as commercial courts and arbitration facilities to support cross-border financial dispute resolution within or linked to the IFSC. 

• Awards and judgments sit within the broader Indian judicial framework, giving parties access to established appellate and enforcement structures. 

UAE Free Zones also maintain arbitration centres and bespoke dispute resolution mechanisms, but the underlying legal systems vary between civil law and mixed frameworks across emirates and zones, requiring tailored legal analysis for enforcement paths. 

Talent, Cost and Compliance Culture 

India’s demographic and skills profile offer a structural advantage for compliance intensive financial services. 

• According to the Ministry of Skill Development and Entrepreneurship, India adds large numbers of graduates annually in commerce, accounting, management and allied disciplines, forming a deep pool for finance, legal and compliance roles. 

• GIFT City’s planning as an integrated township, with office, residential and social infrastructure, supports clustering of international financial institutions and professional services within a controlled cost environment compared to many global financial districts. 

UAE Free Zones rely heavily on expatriate professionals, often with significant experience in global finance, but this translates into higher all in staffing and relocation costs, as well as visa linked talent models. For UK firms considering scalable global capability centres, middle and back-office hubs or risk and compliance functions, GIFT City India IFSC can therefore provide a cost efficient and skills rich location tied into India’s wider talent ecosystem. 

Strategic Parameters: GIFT City India IFSC vs UAE Free Zones 

Parameter	GIFT City India	UAE Free Zones
Regulatory model	Single statutory authority (IFSCA) under an Act of Parliament.	Multiple zone and financial regulators under emirate/federal frameworks.
Core tax incentive	Section 80LA – 100% deduction for 10 consecutive years in a 15year block.	0% rate on “qualifying income” for qualifying Free Zone persons; conditions defined by decisions.
India market linkage	Direct integration with India’s financial system through dedicated IFSC rules.	India related activity usually structured via separate Indian entities and approvals.
Legal system	Common law with Indian constitutional safeguards and courts.	Mixed systems; common law style in some centres, civil law elements elsewhere.
Talent and cost base	Large domestic pool of finance and compliance talent; competitive operating costs.	Expatriate heavy workforce with higher typical employment and living costs.

Positioning for UK Firms: Which IFSC is “Better”? 

For UK firms whose strategic priority is India or South Asia, GIFT City in India is increasingly assessed as a closely aligned platform. The presence of a single statute backed regulator, a codified 10-year tax holiday under the Income Tax Act, proximity to Indian markets, and a common law legal system together create a structured environment for cross border banking, funds, treasury, and structured finance linked to India. 

UAE Free Zones remain well established options for UK businesses focused on the Middle East and Africa, as well as for regional holding structures operating under the UAE’s federal corporate tax framework. However, where financial activity is substantively India linked, additional structuring layers, qualifying income requirements, and the need for parallel alignment with Indian regulations can make UAE based setups less direct. 

For senior UK decision makers, the practical outcome is that GIFT City India is typically more suitable where: 

• The principal assets, counterparties, or investors are India linked. 

• Long term tax certainty and alignment with Indian policy over a 10–15-year horizon are required. 

• Compliance, risk, and support functions are expected to scale using India’s finance and legal talent pool. 

Where mandates are broader and centred on Gulf region coverage, or where UAE operations are already deeply embedded within group structures, UAE Free Zones are likely to continue operating alongside GIFT City as complementary jurisdictions for UK headquartered firms.