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Cross-Border Succession Planning for BRICS HNWI Migration

Sunita Singh-Dalal

Sunita Singh-Dalal

Sunita Singh-Dalal is Partner leading the Private Wealth & Family Offices at Hourani in the UAE. She advises on cross-border estate and succession planning, wealth management, formulating and implementing family codes of governance, family constitutions, and establishing family offices.

The world witnessed a global paradigm shift in August 2023 with the unprecedented announcement of the proposed inclusion of Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE within the BRICS alliance. The enhanced BRICS alliance created in January 2024 shall inevitably positively impact the dynamics of global diplomacy, geopolitical stability, international trade, and economic diversification in more ways than is possible to imagine. What was previously considered to be an economically fragile conglomerate is now clearly invigorated by virtue of its new members, two of whom possess significant sovereign wealth and are on a clear and consistent development trajectory that shows no signs of abating: Saudi Arabia and the UAE.

The 2024 BRICS alliance currently represents approximately 45% of the global population and 36% of its gross domestic product when adjusting for purchasing power parity. Furthermore, because of the inclusion of Iran, Saudi Arabia, and the UAE — three major oil suppliers — the size, economic power, and geopolitical influence of the alliance is forecasted to expand exponentially.

This reincarnation of BRICS is also predicted to positively impact the investment migration of high-net-worth individual (HNWI) residents within member states due to the creation of strategic trade and investment opportunities that we have already begun to witness.

Three businesspeople in discussion around a tablet

The BRICS members (as the recent data in this report illustrates) have seen a combined wealth growth of 54% between 2013 and 2023. Integral to such growth is the increased number of HNWIs resident within the member states who are keen to exploit the economic opportunities of a rapidly globalizing economy and to explore new and diverse opportunities in other geographies. Forecasts also indicate that such expansion of wealth shall remain consistent across all member states between 2023 and 2033. Ironically, several member states are also some of the top ranked countries for the outbound migration of HNWIs.

The UAE: Leading the way in HNWI migration trends and its impact across BRICS 

Notwithstanding the global turmoil from the recent pandemic, the UAE has unquestionably repositioned itself as an international financial center and an optimal HNWI investment migration destination. In 2022, it was projected that the UAE would attract the largest net inflow of HNWIs, with approximately 4,000 more millionaires expected to relocate to the country than depart, a colossal increase of 208% in only two years! Interestingly, a substantial portion of these HNWIs originated from BRICS member states, notably India and Russia.

The UAE could stand to benefit substantially from its BRICS membership given the large number of HNWIs in other member states keen to relocate to greener pastures.

Ironically, forecasts in 2022 and 2023 (produced by Henley & Partners) highlighted that multiple BRICS member states were among the top-ranked countries forecast to see high net outflows of HNWIs, whereas the UAE was the only ranked member state with a significant inflow of HNWIs: 5,200 in 2022 and 4,500 forecasted in 2023. This trend, which shows no signs of receding, indicates that the UAE’s inclusion within the BRICS alliance might further consolidate the growth of HNWI inflows from other member states.

Given its financial stability, economic diversification, and growth, coupled with its status as an investor-friendly hub, the UAE clearly distinguishes itself from other BRICS members. Not only has it recently embarked upon a wide range of comprehensive economic partnership agreements with other member states, but it is also one of the few countries in the Middle East that offers a wide range of successful and beneficially enhanced investment migration programs. The UAE consistently incentivizes HNWIs with investment opportunities, attractive tax incentives, and long-term residence options, the most recent of which was announced in late January 2024. It is also anticipated that as the UAE (and perhaps other newly admitted members) becomes entrenched and integral to the various geopolitical and economic agendas of BRICS, additional inducements and programs specifically tailored to the alliance’s member states could emerge. Such initiatives would serve to further reinforce the UAE’s position as a top destination for HNWI migration, fostering closer economic ties and cooperation within the BRICS community.

Enhanced residence programs in BRICS nations: A spotlight on Saudi Arabia

In parallel with the UAE’s efforts to attract HNWIs to the Middle East and disrupt historic global financial centers, Saudi Arabia, the newest member state, has taken significant steps to diversify its economy. Following the path taken by the UAE, and in line with its own Vision 2023, the Kingdom aims to become an international financial center and an investor-friendly hub, not just for HNWIs, but also for multi-national conglomerates as it entices them to relocate their regional headquarters to the Kingdom in exchange for unprecedented tax rebates.

Immediately following the commencement of its BRICS membership, Saudi Arabia introduced five new products to its premium residency program, positioning itself strategically and further enhancing its attractiveness to foreign investors and professionals. The program, with its five diverse categories — Entrepreneur, Gifted, Investor, Real Estate Residency, and Special Talent — is discerningly curated to offer various benefits that resonate with the current trending requirements of HNWIs seeking to capitalize on cross-border trade opportunities. The Investor and Entrepreneur options are particularly noteworthy as they are clearly aligned with the country’s ambition to establish a dynamic business environment. These options offer direct permanent residency to those able to make substantial investments or set up entrepreneurial ventures within the Kingdom.

This is perfectly harmonious with the ambitions of HNWIs from BRICS member states, who are eager to identify lucrative and diverse investment opportunities within business-friendly environments of another member state in anticipation of bilateral trade agreements and cross-border incentives. Hence, following its recent admission to the G20, Saudi Arabia is not only diversifying its own economy, but is also creating new avenues for HNWI migration and investment across the BRICS nations, directly contributing to the alliance’s collective economic strength.

But how does this impact cross-border estate and succession planning?

Cross-border estate and succession planning for HNWIs is a multi-faceted process that involves managing intricate, extensive portfolios of financial assets, navigating complex family dynamics, and addressing potentially adverse tax implications. The primary objective is often the preservation and protection of wealth, coupled with the facilitation of the transfer of wealth to designated heirs across geographies in the most seamless and tax-efficient manner possible — certainly no mean feat to achieve and one not to be rushed or underestimated!

HNWIs seeking to capitalize on new cross-border investment opportunities with the objective of diversifying portfolios and boosting investment activity across the BRICS community must proceed with caution at the outset. If adequate professional advice is not sought at the initial stages of such strategic decisions, individuals may find that their mere involvement in the management and control of newly established ventures may inadvertently create adverse tax liabilities due to their pre-existing residency in a higher tax jurisdiction.

The BRICS alliance, by virtue of its global economic and political influence, has the potential to facilitate efficiently integrated financial, legal, and fiscal frameworks resulting in harmonious and simplified cross-border activity between member states. Were a common currency to be introduced among the BRICS community, as has been recently reported, it is feasible that fiscal incentives may be offered to residents within those BRICS members states, thereby positively impacting estate and succession planning. This would also create easier access to diverse markets, streamlined legal processes, and potentially harmonized tax regimes that may positively impact estate planning strategies directly benefiting HNWIs.

Note: The author would like to acknowledge Mohammed Aloj for his invaluable assistance in producing this essay.

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