• Data leak shines spotlight on the country’s offshore real estate wealth
• FBR chairman says Dubai leaks will prompt investigation, trigger new tax laws
• Pakistan’s political, media, military and business elite listed as owners in data

OFFICIALS in Pakistan have tried in recent years to unearth details of Pakistani citizens who own assets in Dubai with an aim to bring undeclared assets and income into the tax net. But they have made little headway. Dubai authorities are reluctant to share information about something as simple as the number of Pakistani citizens with Dubai residence visas, commonly known as iqamas or Emirates IDs.

There is also a political element to the stonewalling: Pakistan doesn’t have the geopolitical clout to demand this information. Today, those details — an astounding volume of leaked property data that includes over 23,000 properties listed as belonging to Pakistani nationals up to the spring of 2022 — are at the fingertips of journalists from scores of media outlets around the world.

The leaked data provides a detailed overview of hundreds of thousands of properties in Dubai and information about their ownership or usage, largely from 2020 and 2022. It was obtained by the Center for Advanced Defence Studies (C4ADS), a non-profit organisation based in Washington, D.C., that researches international crime and conflict.

It was then shared with Norwegian financial outlet E24 and the Organised Crime and Corruption Reporting Project (OCCRP), which coordinated an investigative project with media outlets from around the world. Titled ‘Dubai Unlocked’, the collaboration includes 74 partners from 58 countries. Dawn is part of that collaboration.

A mere mention in the data is not evidence in itself of financial crime or tax fraud. Nor does the data contain information such as residence status, sources of income, tax declarations of rental income or capital gains. In fact, several of those approached by Dawn for comment on their properties said they were declared to the tax authorities. But it does paint an astonishing picture of contrasts. Pakistan, a developing country teetering on the edge of economic collapse, begging international lenders and friendly countries for lifelines in single digit billions, features prominently in the data.

While 17,000 Pakistani citizens are listed owners in the 2022 leak, academics using the data and additional sources put the actual number of Pakistani owners of residential property in Dubai at 22,000. They further estimate that the apartments and villas may have been worth more than $10 billion at the start of 2022, but with the more than 25 per cent increase in property prices over the last two years, the real worth of Pakistanis’ residential properties in Dubai could now be well above $12.5bn.

“If we have the data you are talking about, as well as the information on residence status, we will make sure those who are eligible to pay tax in Pakistan on rental income or capital value are doing so,” Malik Amjed Zubair Tiwana, chairman of the Federal Board of Revenue (FBR) tells Dawn. “It may be a sensitive matter, and perhaps the law will have to change, but with political will we will go all out against tax evaders. The government is prepared for this.”

He added that “citizenship has no importance in tax law” as taxation is linked to residence status. “We have been trying to get information from the immigration department of Dubai to determine tax status, but it has not materialised.”

Past outreach from Pakistani officials to Dubai’s tax counterparts, too, has delivered little. Both the incumbent FBR chairman and former FBR chairman Shabbar Zaidi tell Dawn the Dubai authorities are not forthcoming about sharing information on iqamas, for instance, despite the existence of a tax treaty between the UAE and Pakistan to avoid double taxation. In 2019, the FBR in a strongly worded handout expressed its frustration at the silence of Dubai authorities on this issue, and threatened to terminate the treaty. And yet, the Dubai authorities remained tight-lipped.

Speaking to Dawn, Mr Zaidi shares a revealing incident from the time he was FBR chairman. “[In December 2019] I asked my director of taxes to get iqama details from Dubai authorities to identify which Pakistanis have Dubai iqamas, because those who own property in Dubai typically have iqamas.” Soon after, he said, he was contacted by a senior diplomat who suggested he should not pursue the matter.

The properties owned by Pakistanis range from studio apartments and commercial properties to entire buildings and six-bedroom villas. Pakistanis are listed as owners in some of Dubai’s most expensive districts, including Dubai Marina, Emirates Hills, Business Bay, Palm Jumeirah andAl Barsha.

“I told him, ‘I am asking for my own people’s information, what is the problem?’”

Mr Zaidi continues, “He left unhappy and then went to Shah Mahmood Qureshi [then foreign minister]. He complained to Qureshi, and Qureshi rang me. I told him ‘Leave this, it’s my issue not yours’. Then the UAE diplomat went to Imran Khan [then prime minister]. IK called me and asked what I was doing. He said “Haath haula rakho, they just gave us $1bn.” Mr Khan was referring to the $3bn bailout package pledged by the UAE to Pakistan in January 2019.

Mr Zaidi adds, “Because of Pakistan’s bankruptcy and financial dependency on countries like the UAE, it cannot ask for this information. Dubai thrives on non-transparency, and doesn’t want to share this information.”

Tax, blackmail and vanishing files

Ali Rahim, tax lawyer and former Karachi Tax Bar Association president, explains how tax laws apply to Pakistanis with overseas assets. “The entire world income of resident Pakistanis is liable to be taxed in Pakistan, but they can get credit against their total tax payment for any taxes paid abroad.”

Pakistani residents (those in the country for more than 183 days per year) with assets abroad have to value them at the current exchange rate and pay one per cent tax on that if the value of the asset is more than Rs100 million. This law is being challenged in the high courts and the Supreme Court.

Non-resident or overseas Pakistanis are only liable to pay tax on income generated in Pakistan. They are not required to file a wealth statement or declare overseas assets.

Mr Rahim shares a troubling anecdote. “Six or seven years ago, some government officials on a private visit to Dubai obtained details under false pretexts from various developers of properties owned by Pakistanis. They brought back CDs full of information and then began blackmailing those individuals for money.”

He adds. “Legally speaking, the same laws apply to politicians and PEPs (politically exposed persons) as well but we all know the factual position. I know of instances where PEPs’ files have been put on the backburner and their cases have vanished into thin air.”

According to the Atlas of the Offshore World, compiled by the EU Tax Observatory and Norway’s Skatteforsk Cente for Tax Research, offshore financial wealth (equities, bonds, mutual fund shares, and associated bank deposits) owned by Pakistan has declined from nearly 17 per cent in 2001 to 2pc in 2022. This is largely on account of the increasing transparency in the global banking system. Consider that in 2001, Pakistan’s offshore financial wealth stashed away in Switzerland was $11bn. In 2022, that figure was down to $1bn. On the flip side, the growing transparency in the banking system incentivises a shift towards real estate. And Dubai is the favoured destination by far.

Data gathered for the Atlas of the Offshore World shows that London, with $740 million, comes in a distant second behind Dubai ($10bn plus) for Pakistanis looking to invest in offshore real estate. Singapore is third, with $120m.

The dark side of Dubai

Dubai is a global financial hub often described as a playground for the world’s rich. It prides itself on being an open economy for companies and individuals who want to make investments. But the glamorous emirate has a darker reputation as a tax haven, and top destination for murky sources of cash and money laundering — often through real estate transactions. In 2019, Transparency International dubbed the emirate a ‘money laundering paradise’, highlighting that individuals with questionable sources of income are able to invest in Dubai without restrictions.

A number of individuals that journalists with the OCCRP interviewed, including a former governor of a central bank in the region, spoke about parallel systems being in place.

Two Arab lawyers with representative offices in the UAE told a journalist with OCCRP that there are two economic, financial and security systems running in parallel at the same time. One is formal where all rules and guidelines apply and which conforms to international requirements. The other operates outside the formal system; it survives on cuts from criminals, sanctioned persons and entities — shady investors and millionaires who don’t like to be asked where they got their money. One of the lawyers said, “Private jets full of money are landing frequently in Dubai. No one can ask who the money is for. It’s taken out and deposited in special accounts…”

In early March, Diamant Salihu from Swedish Television did an in-person undercover interview for this project with a salesperson working with Damac, the property development company, at their sales office in Dubai. When discussing the options for payment, the Damac employee at one point told Mr Salihu they can accept crypto currency as well as “full cash payment”, explaining, “If you bring bags of cash we can accept that[…] . There is no limit on cash actually”. He added that “zero questions” would be asked about the cash.

In response to the OCCRP’s questions, Damac Properties denied that it was their policy to propose cash payments by customers. “If a customer wishes to settle by cash, such payment would trigger and be subject to an enhanced due diligence and local declaration and reporting actions. Had your undercover reporter proceeded further […] they would have witnessed the scrutiny and the heightened measures we apply to transactions that trigger red flags.” (excerpt)

The OCCRP reached out to UAE authorities for their response. An official from the UAE embassy in Norway issued the following statement: “The UAE takes its role in protecting the integrity of the global financial system extremely seriously. In February, the Financial Action Taskforce (FATF), the global standard-setter for measures to fight money laundering, praised the UAE’s significant progress. In its continuing pursuit of global criminals, the UAE works closely with international partners to disrupt and deter all forms of illicit finance. The UAE is committed to continuing these efforts and actions more than ever today and over the longer term.”

To support its contention, the embassy cited the following figures: “The UAE has issued fines of more than AED 115 million in relation to money laundering” and “seized assets of more than AED 925 million in relation to breaches of AML practices and procedures”.

Dubai was added to the FATF’s grey list in 2022 but was taken off in February 2024. Some experts, however, have expres­sed concerns that the move was premature and driven by geopolitical concerns.

According to the EU Tax Observatory’s Global Tax Evasion Report 2024: “Real estate is a particularly serious blind spot in international information exchange. Just like financial assets, there are many legitimate reasons for holding real estate abroad, but there are also concerns that offshore real estate, in some cases, may be used for money laundering, tax evasion, escaping international sanctions, or other financial crimes. The attractiveness of real estate as an asset class lies in its relatively stable value over time, the possibility to manipulate prices, and possibilities for anonymous ownership in countries with weak property registers.”

That is what makes the Dubai property leaks so fascinating, because they give us a glimpse into how well-heeled Pakistanis play the real estate market in their favourite offshore investment destination.

The level of detail contained in the leaks is astonishing. There are names, dates of birth, iqama numbers, expiry dates, passport information, telephone numbers and emails of Pakistani passport holders who are listed as having invested in single or multiple Dubai properties. There are also details of purchase and rental transactions. The properties owned by Pakistanis range from studio apartments and commercial properties to entire buildings and six-bedroom villas. Pakistanis are listed as owners in some of the most expensive districts of Dubai, including Dubai Marina, Emirates Hills, Business Bay, Palm Jumeirah and Al Barsha.

For the purpose of this investigation, Dawn reporters examined data linked to public office holders, elected politicians, military personnel and PEPs and undertook a rigorous verification process. The process involved running checks on listed owners by putting their information through the Dubai Land Department (DLD) system. Many of the checks yielded a positive match for ownership, which means that many of the individuals mentioned in this story are still listed as owners in the DLD system today.

The data shared with Dawn reporters is a snapshot of Pakistanis’ investment in Dubai property during a specific period. It is not a historic account of property ownership. It is also not a true picture of all properties bought by Pakistanis (elected or unelected), as many owners remain undetected. Those who purchased property via a lesser known third party, or a shell company, remain undetected in this story.

“Every elite family [in Pakistan] — armed forces, politicians, business people — everyone rich has property in Dubai. This business of taxing them is a small matter; the larger issue is the lack of transparency and the close ties between the elite in Pakistan and the UAE,” Shabbar Zaidi told Dawn.

Data storm

THE property data at the heart of the project comes from a series of leaks of more than 100 datasets. Most of the data comes from the Dubai Land Department, as well as publicly owned utility companies. The data includes the listed owner of each property, as well as other identifying information such as his or her date of birth, passport number, and nationality. In some cases, the data captured renters instead of owners.

Journalists used the data as a starting point to explore the landscape of foreign property ownership in Dubai. They spent months verifying the identities of the people who appeared in the leaked data, as well as confirming their ownership status, using official records, open source research, and other leaked datasets. They identified many Dubai property owners whose presence in the emirate is in the public interest to report on, including people who have been accused or convicted of crimes, face international sanctions, or are politically exposed persons (PEPs).

Published in Dawn, May 15th, 2024