Cyprus Confidential: Why rich Indians vied for ‘golden passports’ from Cyprus

Industrialist Gautam Adani's older brother Vinod Adani, who lives in Dubai, has been known to hold a European Union passport issued by Cyprus since 2016. Now an investigation by the International Consortium of Investigative Journalists (ICIJ) and 67 media partners, including Indian Express, reveals that not just Vinod, but at least 65 other Indians have acquired the ‘golden passport’ from Cyprus.

An investment of 2 million euro (approximately Rs 18 crore) in 2016 made Indians eligible for citizenship of Cyprus, a Mediterranean island off the Turkish coast. The Indian Express report on Thursday mentions the number of Indians as at least 66, but names only Pankaj Oswal, Surinder Hiranandani, Anubhav Aggarwal, N Muthu and Virkaran Awasthy besides Vinod Adani. It is not clear if other Indians happen to be their family members.

While it was perfectly legal to acquire a ‘golden passport’, several of the Indians named in the Cyprus Confidential report are under investigation in India. The Hindenburg Report had claimed that Vinod Adani, named earlier in the Panama Papers as well as Pandora Papers, or his close associates, were controlling 38 shell companies based in Mauritius. Pankaj Oswal, reputed to have bought a house in Switzerland for 200 million euro, had shut down the company he floated in Cyprus after acquiring citizenship.

Anubhav Aggarwal, the report says, is a "key accused" in the National Spot Exchange Limited (NSEL) scam, who was arrested from Abu Dhabi in 2020 and his property attached by ED. N Muthu alias MGM Maran from Tamil Nadu was also accused of investing Rs 293 crore in two companies in Singapore without the approval of the Reserve Bank of India. Awasthy and his wife were accused of duping farmers and committing economic fraud to the tune of Rs 750 crore and arrested from London.

But India is not the focus of the investigation. The ICIJ website makes it clear that the investigation’s findings point to how Russian oligarchs, Putin cronies and Syrian warlords, among others, had acquired an EU passport despite sanctions and regulatory restrictions. The website, in fact, makes no mention of India or Indians. It does, however, name a German journalist close to Russian President Vladimir Putin and shows money transferred to him in Germany from Cyprus.

The ‘golden passport’ scheme was discontinued in 2020 by Cyprus, following reports that criminals and fugitives from the law had acquired citizenship of the island with a population of 1.2 million. But since then, the ‘golden visa’ scheme has been introduced by the island for which an investment of Rs 27 crore is required to be made in 2023, either through buying houses or buying shares in companies. The golden visa scheme allows residency rights in the island and after five years of residency, one can still apply for citizenship.

EU passports issued by Cyprus, a member of the EU, continue to be much-coveted documents for people from Asia, West Asia, Russia, and Ukraine, among others. As an EU citizen, a Cyprus passport-holder is free to live, work and travel in the 27 EU member states and enjoy visa-free access to more than 170 countries.

Cyprus has low personal and company tax rates (12.5 per cent for companies, among the lowest in Europe). There is no tax on income from dividends, interest and other sources. There are exceptions for capital gains and there is no Inheritance tax, gift tax, wealth tax or property tax.

What is more, offshore companies and branches controlled from the island are taxed at a low 4.25 per cent, whereas companies controlled from abroad are totally exempted from tax. It assures anonymity of the beneficial owners of offshore entities and there is no import duty on purchase of cars, office and household equipment for ‘foreign’ employees.