How to become an NRI. And pay 0% tax, legally | Akshat Shrivastava

Summary

In 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

00:00

📚 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.

05:00

🌐 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.

10:00

💼 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.

Keywords

💡Tax Residency

Tax residency refers to the concept of being a tax resident in a particular country, which determines the tax obligations one must fulfill. In the video, it is discussed as a strategy for tax efficiency and improving quality of life. For example, the speaker mentions that working in the UAE can lead to paying zero tax due to the country's tax laws, whereas being a tax resident in India could result in paying a significant percentage of income as taxes.

💡Quality of Life

Quality of life is a broad term that encompasses various factors affecting a person's well-being, including economic, social, and environmental aspects. The video script mentions that quality of life in many parts of the world is declining, which is one reason for considering a change in tax residency. The speaker uses anecdotes about friends who have moved to Dubai to illustrate the point that lower taxes and better living conditions can improve one's quality of life.

💡Internationalization

Internationalization in the context of the video refers to the process of expanding one's economic and social activities across borders. It is related to the theme of tax residency as the speaker discusses using internationalization to build wealth through multiple citizenships, shifting tax residencies, and creating international businesses. The video aims to provide actionable points on how to leverage internationalization for financial and lifestyle benefits.

💡Citizenship

Citizenship is the status of being a citizen of a particular country, which often comes with rights and responsibilities. The script explains the difference between singular and multiple citizenship concepts, using the example of India's singular citizenship policy versus the US's allowance for multiple citizenships. This concept is crucial for understanding tax residency strategies, as it impacts the legal framework within which one can hold multiple nationalities and tax statuses.

💡Taxation

Taxation is the process by which a government raises revenue by levying a charge on the income, wealth, or transactions of individuals and businesses. The video discusses the increasing burden of taxation worldwide and how it affects the quality of life. The speaker uses the example of the UK's high taxes and economic stagnation to highlight the need for individuals to consider alternative tax residency options.

💡Golden Visa

A Golden Visa is a type of residency permit granted to individuals who invest a significant amount of money in a country, often in real estate. In the script, the speaker explains that investing 2 million AED in Dubai can result in a Golden Visa, allowing expatriates to live in the UAE for 10 years. This is an example of how tax residency can be shifted through investment.

💡NRI Community

The term NRI stands for 'Non-Resident Indian,' referring to Indians living outside India. The speaker mentions launching an NRI Community to share knowledge about international diversification, including investment strategies, real estate, and taxation. The community aims to educate and support NRI individuals in navigating the complexities of living and investing abroad.

💡Tax Efficiency

Tax efficiency refers to the minimization of tax liability through legal means, often by taking advantage of tax laws and regulations. The video's theme revolves around achieving tax efficiency by understanding and leveraging tax residencies. The speaker provides examples of how different tax systems in various countries can be used to reduce tax burdens.

💡Income Streams

Income streams are sources of earnings that individuals or businesses receive, such as wages, investments, or rental income. The video discusses the concept of shifting certain income streams to more tax-efficient jurisdictions. The speaker explains that while some income, like rental income from properties in India, is tied to the country of origin, other income streams like internet-based services or consultancy can be shifted to take advantage of lower tax rates in other countries.

💡Territorial Taxation

Territorial taxation is a system where taxes are levied based on the source of income, meaning that income earned within a country is taxed by that country, regardless of the taxpayer's residency status. The script clarifies that while one can change tax residency, income originating from a specific country is still subject to that country's taxes, even if the taxpayer resides elsewhere.

💡Consultancy

Consultancy refers to the provision of expert advice or services to individuals or businesses. In the context of the video, consultancy is one of the income streams that can be shifted to a different tax residency to achieve tax efficiency. The speaker gives examples of various types of consultancy services that can be provided internationally, such as real estate or software 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