The upheavals of the past 12 months in India – political, health and economic – are convincing many Indians to look abroad for a more secure and peaceful place to live
Mohammed Asaria, founder and managing director of Range Developments
Mohammed Asaria explores the rising popularity of the Palm Jumeirah, Grenada Citizenship, UAE Residency & DIFC Foundation among non-resident Indians (NRI).
The upheavals of the past 12 months in India – political, health and economic – are convincing many Indians to look abroad for a more secure and peaceful place to live.
Traditionally, this has meant the United Kingdom or the United States, but increasingly a number are finding the solution lies closer to home, with many choosing Dubai in the United Arab Emirates.
Dubbed “India’s most vital hub” by Reuters, a news agency, the links between Dubai, the most dynamic city in the region and India have always been very close. Indeed, the Indian rupee was its official currency until 1959. Indians are the largest ethnic group in Dubai, and the only city in the United Arab Emirates that boasts both Hindu temples and a Sikh Gurdwara.
“In less than 10 years, the UAE has achieved a remarkable transformation of its regulatory framework,” says Yann Mrazek, managing partner of M/HQ in Dubai. “Both the DIFC and ADGM have become top 25 global [tier1] financial centres. The UAE is also one of the top 10 most competitive structuring centres worldwide as well as top 10 FDI jurisdiction. This makes the UAE one of the five ’super-jurisdictions’ – together with the US, the UK, Hong Kong and Singapore.” And with Hong Kong looking increasingly volatile, this reduces one of the options.
Yann Mrazek, managing partner of M/HQ in Dubai
Until fairly recently, it was possible for people to move freely between the two jurisdictions, and if you had investments outside of India there were no fiscal implications. But the time has come for people to make a choice: You need to stay in India and pay all the taxes, or move out and do not overstay whenever you return for a holiday or a wedding.
Any Indian relocating to Dubai can be sure of a warm welcome and the consoling proximity of their compatriots, but what about the practicalities? The first step is to apply for residency. That is extremely efficient as there are no ethnic barriers or quotas. All that is required is either an investment in real estate or through establishing a company, and within less than two months the process is complete. And you can bring the entire family.
“A property purchase of more than 1 million dirhams entitles people to an investor visa renewable every three years,” says Khalid Abul Huda, Managing Partner of Sanctuary Corporate Services. “Invest at least 5 million dirhams and you can get a five-year visa. Alternatively, you can set up a company in a freezone.”
Indians are traditionally large buyers of Dubai real estate, and there has been a marked increase in the past few months. There is a range to suit every pocket – from apartments, small villas, to mansions in Emirates Hills, the Palm, Al Barari or even District One.
Indians are traditionally large buyers of Dubai real estate, and there has been a marked increase in the past few months
“You can buy a nice family home for $1m – equally you can spend $35m – depends on what people want,” says Andrew Cummings, managing director of Luxuryproperty.com. “The process is staggeringly easy – you can buy almost instantly, you can transfer within less than a couple of weeks. We cater for all demand – and this is a great time to buy. Market is lowest for years, despite bounce of last few months, the reality is prices still a long way from where they were. What people forget is that there is a real lack of supply in the luxury market – all the big off plan units have been completed, but there are no new projects coming onstream.”
Purchase of a property which gives residency is just one step. Another, is to gain citizenship of another country to mitigate against extra territorial (citizenship based) Indian taxes. One of the most popular, both for its travel, stature, security and tax-efficiency advantages, is from the Caribbean Island of Grenada. Range Developments, the leader developer of luxury hotels in the Caribbean, having already successfully built and launched the Park Hyatt St Kitts and The Cabrits Resort Kempinski Dominica, is now building the Six Senses La Sagesse in Grenada. An investment of $220,000 in the project, and assuming citizenship is granted, gives visa free travel to more than 140 countries, including the United Kingdom, the European Union, Russia, China, Singapore and many other places.
Andrew Cummings, managing director of Luxuryproperty.com
Investors also have the opportunity to apply for an E-2 visa in the US, something that is unique to Grenada among Caribbean countries that offer citizenship-by-investment. So not only does Grenada citizenship provide the widest global mobility, as well as, a hedge against the rising global anxieties but also an expeditious and cost effective path to reside in the US. An invaluable benefit.
India’s new Deemed Tax Residency Law of 2020 may make an Indian citizen liable to tax if their total income in India exceeds Rs1.5 million (US$20,225). According to Dr Anup P. Shah, one of India’s leading tax consultants, an Indian citizen living in a tax-free country could become liable for Indian taxes even if he does not set foot in India. These regulations only affect non-resident Indians (NRIs). If you are of Indian origin and live abroad but hold a foreign passport, you are not affected by these deeming provisions. For instance, citizens of the Caribbean nations such as Grenada who are residing in jurisdictions where no income tax is levied are considered outside the scope of these provisions.
Not seeking to cause anxiety, but many speculate that as India migrates towards citizenship based taxation, this will be accompanied by an exit tax – a tax payable when one returns and surrenders’ their Indian passport. Indeed, we are not talking about small amounts, in the US this equates to a 23 percent net capital gains tax. A definite call for action while this tax remains on the drawing board for the Indian tax authorities.
Indian citizen living in a tax-free country could become liable for Indian taxes even if he does not set foot in India
Once the family is installed in Dubai, they can take advantage of the serious schooling and healthcare on offer, as well as the leisure activities and cultural events.
Finally, it is important to remember that you need to be serious about the move. In other words, there is no point buying property in Dubai and continuing to live in Delhi. The tax authorities are watching and will spring into action.
“Assets located in India are subject to tax in India, but you can put them into a local trust; the same goes for local shares and dividends. But any assets outside India are no longer subject to India tax,” says Yann Mrazek. “It is important that people plan before acting. A lot of people act before planning – this comes with some level of risk. Other people do not stick to a disciplined game plan. This is where problems can appear – everything you do can affect everything else. What you cannot do is pretend to move, as tax authorities are watching for just this mistake.”