ISLAMABAD: The country’s top tax machinery claims to have received data of the Pakistani nationals who have obtained residence by investments in the United Arab Emirates in a bid to hide their illegal wealth.

The data was collected from the Dubai Land Department (DLD) at the conclusion of a three-day (Oct 8-10) meeting in Dubai. Pakistan was represented in the meeting by Federal Board of Revenue (FBR) Secretary for International Taxes Sajida Kausar.

Well-placed sources told Dawn that the FBR’s international taxes wing was scrutinising the data and those identified with correct addresses and accurate identification would be served notices for tax collection.

Dubai authorities yet to provide information about those who have obtained iqama

However, the DLD has yet to provide data about the Pakistani nationals who have obtained iqama (work permit) in order to hide their illegal wealth.

The FBR had on Aug 22 sent a letter to the UAE, seeking information about all Pakistani nati­onals who have obtained iqama and residence through investment.

The sources said the Dubai meeting was a follow-up to the letter sent to the UAE authorities.

Taking to Twitter, FBR chairman Shabbar Zaidi said he was pleased to say that a very productive meeting had been held in Dubai on Oct 9-10 on the matter of exchange of information under the avoidance of double taxation treaty. “Dubai Land Department will instantly provide details of Pakistani owners of Dubai properties. Iqama abuse is also being handled,” he tweeted.

The UAE law allows foreign nationals to obtain iqama on the basis of investment beyond a certain threshold. The issue gained importance in Pakistan in the wake of information received from the UAE in which 3,620 accounts have been reported to Islamabad. However, the number of accounts with substantial balance is negligible.

“We have sent back all the data for exchange with the UAE authorities to get actual actionable data,” a source in the FBR told Dawn.

Earlier, the FBR had also received data from the Federal Investigation Agency about Pakistani nationals’ investments in the UAE, but issued notices in 20-30 cases only and made a recovery of Rs400 million. The cases were pursued after former chief justice of Pakistan Siqib Nisar had taken suo motu notice on Dubai properties.

One of the cases was of Prime Minister Imran Khan’s sister Aleema Khanum who paid Rs29.4m in taxes and fine for concealing her UAE property.

According to the source, the FBR’s international taxes wing was scrutinising the data provided by the DLD and it would take a few days to identify the potential tax evaders, adding that the total number of Pakis­tani nationals would be known after full analysis of the data.

He said the FBR was interested in actionable data with true potential of tax evasion. “We will only target medium to big investors.”

The source, however, said that there was a chance of overlapping in the data of residence by investments and those who have iqama. He said the FBR had no problem with the Pakistani nationals investing and doing business in the UAE legally with lawfully remitted funds. “We are gravely concerned with the persons who have siphoned off funds illegally from Pakistan, parked them in the UAE and are now hiding behind iqama-based residential status,” the source said.

According to him, Pakistan has also agreed to give information about UAE investors to the Dubai authorities. However, there is no tax on income in the UAE. Therefore, according to the source, Dubai may not be interested in getting information from Pakistan.

Pakistan and the UAE had on Feb 13, 1993 signed the agreement for avoidance of double taxation and prevention of fiscal evasion with respect to taxes. Both countries have historically continued to maintain a vibrant exchange of information bet­ween them. The sighing of the OECD-Multilateral Convention on Mutual Administrative Assistance in Tax Matters (OECD-MC) has reinforced its importance.

Moreover, Pakistan and the UAE have in place an active automatic exchange of information on bank and financial accounts under a common reporting standard — the Multilateral Competent Authority agreement signed under the OECD-MC.

Published in Dawn, October 12th, 2019