The art and ‘craft’ of buying foreign passports

newsimageFleeing India has never been so easy. Specialised firms, with offices in Dubai and other financial centres, are in regular touch with many Indian wealth managers, tax practitioners, and lawyers -- fishing for rich clients who are ready to surrender their Indian passports and take citizenship of countries like Dominica, St Lucia, Antigua, Grenada, St Kitts, Malta, or Cyprus. For many well-heeled Indians, it’s an escape route to an easier tax regime and jurisdiction promising friendlier business climate; but for some, it’s a secret plan to run away from Indian courts well before local enforcement authorities get a whiff of their handiwork. ET reached out to some of the leading firms which process and facilitate the programmes that offer citizenship between 3 to 4 months for investment ranging between $100,000 and $2.4 million. “Over 10% of our clients are Indian NRIs as well as Indian nationals residing in India. During the course of the past 4 years, we have witnessed a trend of over 40% increase in applicants coming from India… Our clients find us online or through word of mouth. Between July 2017 to February 2018 there has been a 65% increase in enquiries for an alternative citizenship from both NRI and Resident Indian nationals following a high-profile push by Prime Minister Narendra Modi’s administration to be more vigilant and effective on tax collections on individuals and corporates owned by either by resident or NRIs,” said Veronica Cotdemiey, CEO of the Dubai-headquartered Citizenship Invest, which over the 9 years since its inception has advised thousands to obtain new nationality. “Any country with a lawful citizenship by investment program or an immigration program conducts thorough due diligence on all applicants before granting the residency or citizenship. If the applicant, no matter the nationality, is a defaulter of bank loans or has been involved in tax evasion they would not be granted citizenship,” said Cotdemiey. But chances are such people can never be touched if news of their involvement in a fraud breaks long after their application for citizen has been accepted, investment in the new country has been cleared, and a new passport has been issued. Arton Capital, which has advised 200 families from India in the past five years, has received higher enquiries since January 2017. This was possibly due to demonetisation, said Leena Motwani, associate vice president at Arton in Dubai. CARIBBEAN CHARM Many were drawn to the Caribbean islands -- Commonwealth of Dominica and St Lucia -- due to low application cost. These passports allow visa-free travel in 120 countries including the Schengen zone, UK, Singapore, Malaysia, Hong Kong and other relevant jurisdictions and the citizenship programs require single applicants to make a financial contribution of $100,000 to a government fund. To improve their fragile finances, these tiny countries, along with ones like Antigua and Barbuda -- where a single applicant has to pay only $50,000 (Rs 34 lakh at the present exchange rate) -- have developed schemes where contribution to a government fund or a real estate investment can fetch citizenship in a few months. The currencies are pegged to the dollar and there is no tax on foreign income, capital gains, imports, gift, inheritance and wealth. Many Indians, said Cotdemiey, are interested in Grenadian citizenship as it is the only Caribbean passport that allows visa-free entry to China, which is an advantage for Indians who have businesses in China. Grenada, which reopened the programme in 2013, offers citizen for a non-refundable contribution of $200,000 to the National Transformation Fund (NTF). According to Marco Gantenbein, Managing Partner at Henley & Partners (Middle East, Dubai, UAE), in terms of residence-by-investment program with minimum physical presence requirements, the Thailand Elite Residence Program and Portugal’s Golden Residence Permit Program are the most popular among Indian nationals. “While India does not yet allow dual citizenship, wealthy Indian nationals are looking for a ‘Plan B’ option that will provide them and their family with this `safety and security — and the most direct route is through residence-by-investment,” said Gantenbein. The wealthy, with little to fear, prefer Cyprus which is currently the only European country which can grant an entire family a European nationality within 6 months. Investors are requ