Strict tax rules and reporting requirements in India, as well as the need for stronger passports, remain the primary factors driving the migration, According to the 2018 Henley Global Citizens Report, which follows private wealth and investment migration trends globally.
According to a new survey, as many as 8,000 high-net-worth individuals are predicted to leave India in 2022.
Strict tax rules and reporting requirements in India, as well as the need for stronger passports, remain the primary factors driving the migration, according to the 2018 Henley Global Citizens Report, which follows private wealth and investment migration trends globally.
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More and more young entrepreneurs are exploring global business and investment prospects while demonstrating an ever-increasing risk appetite, according to the report.
The report also showed that the number of US dollar millionaires and billionaires in India will grow by 80% over the next 10 years, while it will only grow by 20% in the US and by 10% in France, Germany, Italy, and the UK.
“General wealth projections for India are very strong. We expect the HNWI (high net worth individuals) population to rise by 80% by 2031, which will make India one of the world’s fastest growing wealth markets during this period. This will be fueled by especially strong growth in the local financial services, healthcare, and technology sectors, “New World Wealth’s Head of Research, Andrew Amoils, stated.
But why are India’s wealthiest citizens fleeing the country?
While the old industrialist base remains intact, a new generation of tech entrepreneurs is joining their ranks, eager to diversify a portion of their wealth in countries that provide a majority of benefits and low tax rates.
The appeal of a higher standard of living, including better educational and health facilities for the family, also continues to be a key driver, perhaps even more so in the wake of Covid.
“Increasingly stringent tax residency rules (introduced in 2020 and 2021), with no relief in individual taxation rates for HNWIs, coupled with a desire for visa- free travel are also consistent primary motivators for alternative residence and citizenship,” said Bijal Ajinky, Partner in the Direct Tax, Private Client and Investment Funds Practices of Khaitan and Co.
Where are they migrating?
EU countries, as well as traditional favorites Dubai and Singapore, are gaining popularity among Indians.
While Singapore is a popular choice for digital entrepreneurs and family offices due to its robust legal system and access to world-class financial advisors, the Dubai Golden Visa has emerged as a winner in some circles due to its ease of acquisition and the numerous options it provides.
The latest predicted 2022 net inflows and outflows of US dollar millionaires (the difference between the number of high net worth individuals who relocate to and the number who depart from a nation) indicate a net loss of around 8,000 millionaires for India this year. These outflows aren’t particularly alarming because India creates many more new billionaires each year than it loses to migration. There is also a tendency of wealthy people returning to India, and once the country’s standard of living improves, we expect wealthy people to return in greater numbers.
According to the Henley Private Wealth Migration Dashboard, the UAE is predicted to draw the greatest net inflow of HNWIs globally in 2022 (at least 4,000).
Singapore is ranked third, behind Australia (3,500), with net inflows of 2,800 predicted this year.
Israel is ranked fourth on the list, with a score of 2500, followed by Switzerland with a score of 2200, and the United States with a score of 1500.
“We are also starting to receive considerable interest from families from across Asia who are looking to make Singapore or the UAE their established base. Countries that are providing excellent infrastructure for wealth preservation are likely to remain popular destinations,” said Nirbhay Handa, Group Head of Business Development at Henley & Partners.
“Challenges for Indians include stringent exchange controls for making remittances, inheritance taxes for overseas assets, and Indian residency rules targeting statelessness. Indians are progressively turning to legal and financial advisors for nuanced advice on navigating these obstacles through the use of private trusts, holding entities, separate wills for different jurisdictions, and so on. Individuals are advised to start planning well before they intend moving any capital to avoid any unpleasant surprises,” said Ajinky.
Others looked to Europe, particularly Mediterranean countries like Portugal, Malta, and Greece, because they offer a gateway to the EU, a high standard of living, and, in most cases, a low physical residency requirement – all of which are important to those who want to keep their families or businesses in India.