ISLAMABAD – On Monday, Shabbar Zaidi, Chairman of Federal Board of Revenue(FBR), wrote a letter to the UAE authorities, asking them to plan a methodthrough which they can share the details of Pakistanis who are taking coverbehind ‘Iqama’ based residential status to avoid taxes.
In the letter to the Ministry of Finance UAE, Mr. Zaidi stated that hewould like to bring attention towards schemes like RCI (Residence byInvestment), which are later used to avoid reporting of bank and financialaccount information under OECD’s Common Reporting Standard (CRS) framework.
“The issue is of critical import to us as Pakistan is not being able toaccess actionable bank account information in respect of our tax-residentpersons who are purportedly hiding behind UAE-Iqama based residentialstatus” – the chairman FBR states in his letter.
Previously, Pakistan had asked UAE to share details of those Pakistanishave invested into properties worth billions of dollars. The decision tomove ahead and establish mutual cooperation is yet to be made. If UAEdecides to share the information with Pakistan on such matters, it will bea benefit.He further on said that tax evasion through such methods andstrategies have a big effect on the perception of a common citizen andthere is a declared commitment, and resolve at a high level of governanceto 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 ofInformation between Pakistan and UAE, this issue was talked about with acommitment made by UAE to give a formal response in a given time, which isstill pending. While talking about the significance of the matter, Mr.Zaidi also reminded FBR that this issue was raised by Pakistan’s FinanceMinister with OECD too.
The OECD replied that they are resolving the issue with a two-prongedapproach at the jurisdiction level, first, through implementation of SEOI(Spontaneous Exchange of Information) and secondly, at a FinancialInstitution level, through the due-diligence guidelines of RBI.
*The OECD recommended that:*
“In the future, where jurisdiction has adopted the SEOI mechanism, thePakistani competent authority should be made aware in cases where itstax-residents obtains citizenship or residence status via a foreign CBI/RBIprogramme”
Taking in view the above, his suggestion is an urgent meeting to planmodalities to help overcome RBI problem, including operationalization ofSEOI mechanism, between Pakistan and UAE.
Iqama holders that are residing in UAE, don’t have their accounts/balancesshared with Pakistani authorities. Under information exchange from OECD,Pakistan gets data from 29 jurisdictions and now, it has increased to 44countries but the data obtained from UAE is insignificant.