How to become an NRI. And pay 0% tax, legally | Akshat Shrivastava
Summary
TLDRIn this informative video, Akat Sastav discusses the importance of understanding tax residencies for wealth building and improving quality of life. He explains the concept using examples, such as the zero tax rate for personal income in the UAE, and how shifting tax residency can save on taxes. Sastav also covers the complexities of changing tax status, including employment visas, trade licenses, and the 182-day rule for tax residency in India. He concludes by highlighting the potential of international businesses and investments as tax-efficient strategies.
Takeaways
- 📚 Understanding tax residencies is crucial for optimizing tax payments and potentially improving quality of life.
- 🌐 The world is seeing an increase in taxation and a decrease in quality of life in some regions, prompting people to consider tax residency changes.
- 🏫 Akat Sastav, the speaker, has a background in consulting and running a hedge fund, and aims to share knowledge about wealth building through internationalization.
- 💡 Tax residency can significantly affect the amount of tax paid, with examples given of paying 0% tax in the UAE versus 30% in India.
- 🏠 Tax residency is distinct from citizenship; one can hold citizenship in one country and be a tax resident in another.
- 🔄 Shifting tax residency can be achieved by working, investing, or setting up a business in a different country.
- 📈 The concept of 'tax residency' is important for individuals looking to minimize their tax liabilities and maximize wealth.
- 🏦 The UAE is highlighted as an example where individuals can pay little to no tax, depending on their tax residency status.
- 🏦 The script mentions the 'golden visa' in the UAE, which allows expatriates to live in the country and potentially pay minimal tax on certain income streams.
- 📉 The script discusses the complexities of shifting tax residency, including the need to meet specific criteria to avoid being considered a tax resident in a high-tax country.
- 🌍 The video encourages viewers to learn more about tax residencies as a way to potentially save on taxes and enhance their financial situation in a global context.
Q & A
What is the main topic of the video?
-The main topic of the video is understanding tax residencies and how commanding a good tax residency can help save taxes and improve quality of life.
Why is the speaker discussing tax residencies?
-The speaker is discussing tax residencies because taxation is growing globally and the quality of life in many parts of the world is declining, prompting individuals to explore options for more tax-efficient jurisdictions.
What is the speaker's background?
-The speaker, Akat Sastav, has worked with top-tier consulting firms and currently runs his own hedge fund. He is a full-time investor and shares knowledge gained from traveling and studying the investing world with HNIs (High Net Worth Individuals) on his YouTube channel.
What are the potential benefits of having a good tax residency?
-Potential benefits of having a good tax residency include saving a significant amount on taxes and potentially improving one's quality of life by relocating to a country with a better economic and social environment.
What is the significance of the anecdote about the speaker's friend in Dubai?
-The anecdote about the speaker's friend in Dubai illustrates the trend of people moving from high-tax countries like the UK to the Middle East for better economic opportunities and a lower tax burden.
What is the 20% TCS rule mentioned in the video?
-The 20% TCS rule refers to the Indian tax regulation that requires individuals to withhold 20% tax when sending money outside of India, which can be a deterrent for those looking to move funds internationally.
How does the concept of citizenship relate to tax residency?
-Citizenship is related to tax residency in that one can hold citizenship in one country but be a tax resident in another, which can impact the taxes they are required to pay.
What are some ways to change one's tax residency?
-Ways to change one's tax residency include finding employment in a different country, setting up a business, or making significant investments that qualify for residency programs, such as the golden visa in Dubai.
Why might someone not be able to pay 0% tax despite moving to a country with a 0% personal income tax rate?
-Someone might not be able to pay 0% tax even in a country with a 0% personal income tax rate if they spend a significant amount of time in their home country, which could make them a tax resident there, subjecting them to taxes on their worldwide income.
What is the concept of territorial taxation as discussed in the video?
-Territorial taxation, as discussed in the video, refers to the principle that income generated from assets or services in a specific country is subject to tax in that country, regardless of where the individual resides.
What are some types of income streams that can be shifted to more tax-efficient jurisdictions?
-Income streams that can potentially be shifted to more tax-efficient jurisdictions include internet-based services, consultancy, software firms, and export-oriented businesses.
Outlines
📚 Introduction to Tax Residencies and Wealth Building
The video script introduces the concept of tax residencies and their significance in wealth building and lifestyle improvement. The speaker, Akat Sastav, outlines the purpose of the video, which is to simplify the understanding of tax residencies and how they can be leveraged to save on taxes and enhance one's quality of life. Akat shares his background, having worked with top consulting firms and now running a hedge fund, and his intent to share valuable knowledge with his audience. He discusses the increasing taxes and declining quality of life in certain regions, using anecdotes to illustrate the benefits of shifting tax residencies, particularly to the Middle East. He also touches on the challenges faced by countries like the UK and India, including high taxation and issues with public infrastructure, to emphasize the importance of exploring international options for tax efficiency.
🌐 Understanding Tax Residencies and Their Impact on Taxes
This paragraph delves deeper into the concept of tax residencies, explaining the difference between citizenship and tax residency using the example of the UAE where the speaker currently resides. It highlights the benefits of being a tax resident in a country with no personal income tax, as opposed to the high tax rates in countries like India. The speaker also introduces the idea of international diversification, mentioning the launch of an NRI Community where he will share insights on international investment, taxation, and business setup. The paragraph further discusses the different ways one can change their tax residency, such as by finding employment in a country with favorable tax laws or by setting up a business abroad. It also addresses the complexities of shifting tax residencies and the importance of understanding the tax laws of the new country, including the need for a valid trade license or employment visa.
💼 Strategies for Shifting Tax Residencies and Income Streams
The final paragraph focuses on strategies for shifting tax residencies and the types of income streams that can be moved to more tax-efficient jurisdictions. It explains the concept of territorial taxation, emphasizing that income generated in one country is subject to that country's tax laws, even if the taxpayer resides elsewhere. The speaker provides examples of income streams that can be shifted, such as internet-based services, consultancy, software firms, and export-oriented businesses. He also warns against the misconception of simply moving to a tax haven and transferring income from another country to avoid taxes. The paragraph concludes by encouraging viewers to learn more about tax residencies, as understanding this concept could be beneficial as countries restructure their taxation systems and citizens seek more favorable tax environments.
Mindmap
Keywords
💡Tax Residency
💡Quality of Life
💡Internationalization
💡Citizenship
💡Taxation
💡Golden Visa
💡NRI Community
💡Tax Efficiency
💡Income Streams
💡Territorial Taxation
💡Consultancy
Highlights
Understanding tax residencies and their impact on tax savings and quality of life.
Building wealth through internationalization, including multiple citizenships and shifting tax residencies.
The importance of tax residency in light of increasing global taxation and declining quality of life in some regions.
Anecdotal evidence from Dubai illustrating the benefits of shifting tax residency.
The 2023 Indian budget's introduction of a 20% TCS rule affecting money transfers out of India.
The concept of tax residency versus citizenship and its implications for taxation.
Examples of how tax residency can lead to paying 0% tax in certain jurisdictions like the UAE.
The difference between tax residency rules in countries like India and the US regarding multiple citizenships.
Strategies for changing tax residency, including finding employment or setting up a business in another country.
The process of obtaining a golden visa in the UAE through investment, impacting tax residency.
The importance of not being a tax resident of India to avoid paying taxes on foreign income.
Requirements for establishing tax residency in a new country, such as employment visas or trade licenses.
The concept of territorial taxation and its impact on income originating from a specific country.
Types of income streams that can be shifted to more tax-efficient jurisdictions.
Examples of businesses and services that can be relocated to take advantage of lower tax rates.
The potential for tax residency to become a more significant consideration as countries restructure their tax systems.
The introduction of an NRI community for sharing knowledge on international diversification and investment strategies.
A call to action for viewers to learn more about tax residencies and consider their options for wealth building.
Transcripts
hi everyone so on today's video I'm
going to help you understand the topic
of tax residencies and how commanding a
good tax residency can help you a save a
lot of taxes B help you improve your
quality of life and I will do this in
very simple language so that you get
some actionable points out of it I'll
help you understand how to build your
wealth by using
internationalization in the sense that
how to get like multiple citizenships in
case you are aiming for that how to
shift your tax residencies how to create
International businesses how to invest
internationally where to invest
internationally so this is a journey
that I'll take you through for people
who do not know me my name is akat
sastav in the past I had worked with top
tier consulting firms now I run my own
hedge fund I am a full-time investor I
travel across the globe study the
investing world with hnis and whatever
knowledge that I'm gaining I try to
share it through my YouTube for the
benefit of the audiences so let us go
Point by Point uh number one point is
that why should you have tax residencies
and the simple answer to that is is very
simple that hey because the taxation in
the world is growing and on top of that
the quality of life across many parts of
the world is just coming down now what
do I mean by that so let me explain it
by using an anecdote so right now I'm in
Dubai I met a friend of mine who studied
with me at ncad so we had known each
other for roughly 10 years now and he's
currently in Dubai he had been living in
Dubai right after his NCR days and he
was telling me that you know what AK
like UK so many problems are happening
taxes have gone up the economy has
gotten stagnant nothing much is
happening a lot of problems are
happening in terms of entire communal
issues that are happening racism and
whatnot and therefore you know he was
very happy with his decision of Shifting
to the Middle East on top of that if we
look at the migration patterns to the
Middle East a lot of people from UK and
countries like Portugal where is less
growth happening they are shifting to
the Middle East right so this is a trend
from my own country India I can see that
people have struggled on two fronts one
is that if you analyze the last two
years budgets let's go 2023 budget one
of the key changes that was made in 2023
budget was 20% TCS or tax collected at
source rule which simply said that hey
if you're sending money outside India
and if you want to send money from India
to let's say us then you have to block
almost
$200,000 okay so which is like absolute
crazy this is already your taxed hard
ear money and just to send that you have
to block in 20% of your Capital which
will be refunded to you after several
months or maybe even after a year
depending on when you are making this
transaction on already taxed income
right then we get to the topic very
quickly about like the quality of life
right so for example UK and already
covered in India we are seeing that you
know what the airport roofs are falling
new bridges are collapsing rail
accidents all that stuff it keeps on
happening so people really question that
you know what record amount of GST
collection is happening record amount of
tax collection is happening salary
middle class de facto the taxation that
has been put has been crazy so where is
all this tax money going and people
really start questioning that you know
what boss what is the point of paying
taxes and is there something that we can
do to avoid this situation now see guys
I'm trying to teach you a complicated
topic from a wealth building perspective
I want all of you to grow your wealth
build your wealth I'm teaching you from
that lens from a well fer I have no
interest in political debates Etc so I'm
just presenting you options it's your
call whether you want to execute not
execute please watch it with that lens
okay so with brings us to the solution
called as tax residencies so let me
quickly explain the concept of taxx
residencies by using a few examples okay
so in order to understand tax
residencies we first need to understand
the concept of citizenship so for
example if you hold an Indian passport
you are an Indian Citizen and in India
we have a concept of only singular
citizenship and we do not have a system
of dual citizenship which in simple term
means that if you are an Indian and then
you know 15 20 years ago you settled in
Canada and now you are a citizen of
Canada then you have to give up your
Indian citizenship so that is the
concept of singular citizenship that
India follows but many other countries
in the world they follow multiple
citizenship concept for example Us in
the US a US citizen can take multiple
passports and can have multiple
citizenships now this is a country-wise
difference now every country would have
a different structure but on the flip
side what Indians can typically do is
that hey if you are an Indian who is
working in let's say UAE and if you're
working in UAE and let's say that you're
making a salary of 50 lakh in are worth
in dams of course then you will be
paying how much tax you will be paying
zero tax in
UAE and you'll be paying zero tax in
India now why is this the case because
you are a tax resident of UAE and the
personal income tax in UAE is 0% so
therefore out of this 50 lakhs you'll be
getting the entire amount as net amount
but on the flip side if for some reason
you are a tax resident of India on this
5050 lakh you'll be paying roughly 30 %
plus taxes easily right on this entire
amount so you'll be paying at least 15
lakhs as taxes so in simple terms the
meaning of tax residency is that yes you
can be an Indian citizen who is working
in Dubai and paying 0% tax in Dubai the
reason for that is that while you are a
citizen of India you are a tax resident
of UAE hey guys sorry for the
interruption this is the first time I'm
featuring my daughter on my YouTube
channel she would have grown up and said
that you featured my brother but not
feature me so I brought her onto my
video also would just take a few seconds
to explain what I'm doing next so I have
launched an NRI Community now on this
community what I'm going to do is that
I'm going to teach International
diversification I myself will be
spending a lot of time in Dubai so I'm
learning a lot of strategies trips
tricks I keep traveling across the world
meeting a lot of hnis so how to invest
in the US Stocks how to buy
International real estate International
taxation international business setup so
these are some of the topics that I will
cover and also a lot of special classes
special notes are given to the NRI
community so in case you guys are
interested in join joining it the link
is in the description and comment box
with that said let's move over to the
main video okay so a natural question
comes I also want to pay 0% taxes what
is it that I can do okay so see three
options primarily speaking and tax
residencies also differ from country to
Country for example yes if you're doing
a job in UAE then the chances are that
you will be paying close to 0% tax on it
provided that you're an individual for
corporate entities the corporate tax is
9% in Dubai and it varies as per
different Emirates now but on the side
if you are an Indian who is working in
the US you are might be a tax resident
of us and in that respect you might be
paying even 35 40% tax in the US right
so it really depends in terms of where
your tax residency is so this is a very
important question to figure out right
this is one and one way of getting or
changing your tax residency is that you
go and figure out a job in that
particular country yes if your goal is
to pay 0% tax then finding a job in UAE
can really help so this is point one or
strategy one this second way of Shifting
your tax residency is that you build a
business in some other country now
natural question will come that you know
what building a business in India itself
is very tough so how do we go outside
and build a business is it easy to do do
we need to be citizens in that country
to do it again this is a country
specific question in some countries it's
easier to do a business in some
countries it is very very difficult for
expatriates to build a business so you
really need to be country specific here
but in terms of the complexity of the
business the simplest business that
people build is by Investing For example
people come to Dubai they invest 2
million AED or 2 million Dirhams right
which approximately is equal to 4.6 CR
they get a golden Visa right golden Visa
allows the expatriates to live in that
particular country or in UAE for 10
years and basically with this 2 million
ad they might have procured let's say
two uh Properties or maybe like one
property now they are renting it out now
this is generating some income so let's
say they are generating 100,000 AED on
per year basis what will be the tax paid
on this 100K AED well the tax or the
chances are that you'll be paying close
to 0% tax provided that you are not a
tax resident of India now what is the
meaning of provided you're not a tax
resident of India so for this you need
to understand these two Snippets so so I
will just quickly show it to you so the
first key Point regarding tax residency
is that for example let's say that you
come to Dubai you buy like two
properties you you know you shift your
business here and that simplest business
that you have built but after buying the
property you say that you know what okay
like you know Middle East is very very
expensive this that stuff you go back to
India and start spending like 10 months
a year in India now if you do that then
you will fall under this particular
section and it says that in India fiscal
year starts from 1st April to 31st March
and generally an individual is said to
be resident in India or a tax resident
in India if he is in India for more than
182 days in India so I hope I hope you
got the point that this then starts
falling in that gray area and Indian
government can ask you that hey you are
saying that you're a tax resident of
Dubai but you have been living in India
for the last 10 months in this time
frame so pay taxes here right so then
you will have to pay not 0% tax but
maybe a lot more taxes so this is one of
the many criterias that you need to
fulfill that if you're trying to shift
your tax residencies then number one you
have to first and foremost shift your
tax residency out of India so this is
step one that you have to ensure that
you're not a tax resident of India
then you move to further requirements
now what are those further requirements
so the further requirement could be that
number one you if you are doing a job
then you need to have an employment Visa
in Dubai or America or Canada wherever
you are working this is or if you're
setting up a business then you need to
have a valid trade license in Dubai they
issue trade licenses and depending on
the trade license that you are taking
and the number of days that you're
staying in Dubai they will issue you a
tax residency so in simpler words number
one step is that shifting your tax
residency out of India number two is
getting a tax residency in UAE it can be
done through a job it can be done
through setting up a business or by
making an investment where you get to
live in Dubai for X number of days and
that automatically shifts your tax
residency this brings us to an important
conversation you might say that you know
what okay in India I have like these 20
rental units which are making money in
India and what I'll do is that I'll go
to Dubai and I will get a golden Visa I
I don't mind spending like four and a
half 5C and whatever income I'm making
in India from from my properties I will
shift that money to Dubai and I will pay
0% tax you can't do that okay so that is
the concept of origination income and I
will give you very quick Clarity on that
topic so here the concept of origination
of income or territorial taxation is
very simple that see these three houses
are in India they are each generating 1
lakh rupe of rent right so you are
making three lakh rupe now you can go
and live wherever you feel like in Dubai
in Armenia in Germany wherever you are
feeling like but see this is India
originated income and therefore you have
to pay Indian taxes on it as an NRI
right so this is an important point that
you must understand that you can only
possibly shift certain income streams
which are outside India so this brings
me to the final section as to what type
of income streams you can shift to other
more tax efficient residencies while the
options are Limitless but I'll just take
you through a few that can help you
understand this concept more so the
first is that let's say that you are
making money on the internet and you're
providing internet Based Services right
for example resume review right so
you're sitting in India doing resume
review getting money in HDFC bank
account or whatever you are paying like
whatever depending on your income levels
you might be paying 30 35% tax now if
you just simply move to Dubai how much
tax you might be paying on this a you
have to set up the business there will
be an operating cost but the tax paid on
it might be close to 9% so this is one
that internet businesses can be shifted
second is consultancy right the example
that I gave was an example of
consultancy right and consultancy can be
of different types types for example you
could be a real estate consultant you
could be a software consultant you could
be a startup consultant you can be a
life coach so 100 different options are
there third is that you are shifting
your software firm for example many web
3 businesses shifted out of India
because of lack of clarity lack of other
different things and many tech-based
businesses right uh and they are
software based so to say uh they have
shifted to other destinations final is
export oriented businesses now now for
example if you're sitting in India doing
some kind of export which you don't
necessarily need to from India then
maybe shifting your base might make
sense right so this is all the
preliminary information that I could
give you now this is a deeply
complicated topic but I hope that you
got an understanding of what tax
residencies are and it might prompt you
to read more about this topic now this
is actually an option that will come up
more and more as different countries
across the globe they restructure their
taxation system as certain countries put
on more and more taxes then citizens
will be forced to explore other tax
residencies so getting a head start on
this topic could be a worthwhile
investment of your time so definitely
learn more about it and this is a
growing Channel if you support it if you
like subscribe share that would really
mean a lot thank you so much for
watching and I'll see you soon
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