FBR has bad news for Pakistanis having UAE Iqama
ISLAMABAD - On Monday, Shabbar Zaidi, Chairman of Federal Board of Revenue (FBR), wrote a letter to the UAE authorities, asking them to plan a method through which they can share the details of Pakistanis who are taking cover behind ‘Iqama’ based residential status to avoid taxes.
In the letter to the Ministry of Finance UAE, Mr. Zaidi stated that he would like to bring attention towards schemes like RCI (Residence by Investment), which are later used to avoid reporting of bank and financial account information under OECD’s Common Reporting Standard (CRS) framework.
“The issue is of critical import to us as Pakistan is not being able to access actionable bank account information in respect of our tax-resident persons who are purportedly hiding behind UAE-Iqama based residential status” – the chairman FBR states in his letter.
Previously, Pakistan had asked UAE to share details of those Pakistanis have invested into properties worth billions of dollars. The decision to move ahead and establish mutual cooperation is yet to be made. If UAE decides to share the information with Pakistan on such matters, it will be a benefit.He further on said that tax evasion through such methods and strategies have a big effect on the perception of a common citizen and there is a declared commitment, and resolve at a high level of governance to address such issues on a permanent footing. UAE agreed to give formal response in time:
The chairman of FBR also recalled how in a recent meeting on Exchange of Information between Pakistan and UAE, this issue was talked about with a commitment made by UAE to give a formal response in a given time, which is still pending. While talking about the significance of the matter, Mr. Zaidi also reminded FBR that this issue was raised by Pakistan’s Finance Minister with OECD too.
The OECD replied that they are resolving the issue with a two-pronged approach at the jurisdiction level, first, through implementation of SEOI (Spontaneous Exchange of Information) and secondly, at a Financial Institution level, through the due-diligence guidelines of RBI.
*The OECD recommended that:*
“In the future, where jurisdiction has adopted the SEOI mechanism, the Pakistani competent authority should be made aware in cases where its tax-residents obtains citizenship or residence status via a foreign CBI/RBI programme”
Taking in view the above, his suggestion is an urgent meeting to plan modalities to help overcome RBI problem, including operationalization of SEOI mechanism, between Pakistan and UAE.
Iqama holders that are residing in UAE, don’t have their accounts/balances shared with Pakistani authorities. Under information exchange from OECD, Pakistan gets data from 29 jurisdictions and now, it has increased to 44 countries but the data obtained from UAE is insignificant.