Covid accelerates the escape of Indian millionaires

Balcony overlooking Dubai

Rafuru left everything and moved to Dubai to take care of his company for harassment by tax authorities

Wealthy people in India are at the top of the list of people seeking to move abroad through visa programs that offer citizenship or right to housing in other countries in return for their investment.

When he made a harsh call to leave India six years ago, few Rafuru (renamed) did not go for him. He is the second descendant of a healthy Delhi-based family. They have a thriving export business, monopolizing what is commonly referred to as the “sunrise sector”. This is an industry with great potential.

But he left it all behind and moved to Dubai in 2015 to take care of the company’s overseas expansion. He also acquired citizenship by investing in one of the Caribbean countries. He says the main reason was harassment by tax authorities in the Indian enforcement office.

“I was able to see that matter for those who do business around the world,” he told the BBC. “Foreign passports have significantly reduced bureaucratic formalism. I’m less worried about being hit by random tax demands.”

“Fear of taxes” There were daily complaints among the big names in the Indian business world. When Cafe Coffee Day, the founder and owner of India’s largest coffee chain, died in 2019, he accused the former director of the Income Tax Department of harassing him. However, the government has been tightening the territory around business owners in recent years.

Cafe coffee day cafe

Café Coffee Day chain owners accused tax authorities of harassment when they died in 2019

According to one report, tax audits by the Indian Income Tax Department have more than tripled in the last few years.

The government claims that this is “done to eradicate black money (illegal cash hidden from tax authorities) and improve tax compliance.”

However, tax collector tracking was only one of the reasons for his move, Rahul says. He told us that his decision was also driven by the increasing trend of “divide and rule politics” in India. He did not want his children to grow up in an increasingly polarized Indian environment.

He added that many other people in his circle of wealthy friends had also abandoned their citizenship or resident status.

These claims are supported by figures from Wall Street investment bank Morgan Stanley. According to a 2018 bank report, 23,000 Indian billionaires have left the country since 2014.

Dubai skyline

According to reports, 23,000 Indian billionaires have left the country since 2014.

recently, Global Wealth Migration Review Report About 5,000 millionaires, or 2% of India’s wealthy, have left the country in 2020 alone. Indians have also become at the top of the list of people seeking citizenship or residency in other countries in return for monetary investment, compiled by London-based Global Citizenship and Residence Advisory Henley & Partners (H & P). It was.

According to H & P, Covid-19 is a major driver of the ongoing tendency of wealthy Indians to “globalize their lives and assets.” The company even set up an office in India to meet growing demand in the midst of last year’s blockade.

“I think they are [clients] They realize they don’t want to wait for the second or third wave of the pandemic. Now that they are sitting at home, they want to have their treatise. This is called insurance policy or Plan B, “Henry & Partners’ private group director Dominique Borek told the BBC in a video call from Dubai.

According to Volek, a pandemic could be a game changer because it makes the wealthy think about migration in a more holistic way. It is no longer about visa-free travel and accessibility to the global market, but also about wealth diversification, better health care and education to protect against the uncertainties posed by pandemics.

A country like Portugal “Golden visa” According to H & P, not only the program, but also countries such as Malta and Cyprus are preferred as healthy destinations in India.

A man is looking at the immigration section of Dubai Airport

According to a recent report, about 5,000 millionaires in India left the country in 2020 alone.

This huge outflow is not always permanent. Instead of taking all the money out of their home country and breaking business ties, people just invest money in other countries as a fallback option. But that’s not a good omen for developing countries like India, experts say.

“When this happens, they remove themselves, their entrepreneurial abilities, and their income and wealth from the tax base. This can be harmful in the long run. Their exit is the Indian” Sends a bad signal about the “business environment”. Says Rupa Subramanya, a prominent fellow of the Asia Pacific Foundation in Canada.

Andrew Xiamen, Head of Research at New World Wealth, a Johannesburg-based Wealth Intelligence Group, told the Business Standards. -Unlike middle-class citizens, they have the means to leave. “

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