ISLAMABAD: Chairman Federal Board of Revenue (FBR) Shabbar Zaidi on Monday wrote letter to UAE authorities and asked for devising mechanism to share details of Pakistanis who are hiding behind Iqama based residential status to evade taxes.In a letter written to Ministry of Finance UAE by the Chairman FBR Shabbar Zaidi stating that he would invite attention yet once again towards scheme like Residence by Investment (RCI), which then are used to circumvent reporting of bank and financial account information under the 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.The chairman further added that tax evasion through such elitist ploys adversely affects the perception of the common citizen and there is professed commitment and resolve at the highest level of governance apparatus to address this issue on a permanent footing.Earlier, Pakistan had also requested the UAE authorities to share details of those 5000 to 14000 Pakistanis who had invested into properties worth billions of dollars. It is yet to see how both sides decided to move ahead on establishing mutual cooperation for getting benefits. It will be a breakthrough if UAE decides to share information with Pakistani authorities on these subjects, said tax experts while talking to The News here on Monday.The chairman FBR also recalled that in the recent meeting on Exchange of Information between Pakistan and the UAE held on 09-10-2019 in Dubai, the issue was briefly deliberated upon with a commitment by the Ministry of Finance, UAE to come up with a formal response in due course, which is still awaited.Given the significance of the matter, the chairman FBR reminded that the issue was also raised by Pakistan’s Finance Minister with the OECD- the sponsoring organisation of CRS framework to look into the matter and come up with a solution along full spectrum.The OECD has responded that they are tackling the issue with a two-pronged approach at jurisdiction level, through implementation of Spontaneous Exchange of Information (SEOI) mechanism to intercede in respect of potentially high risk RBI programmes, and at Financial Institution level, through publication of RBI due-diligence guidelines. The OECD has also recommended that “in future, where a 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”. We understand that the UAE authorities are grappled with the matter at their own end too.In view of the above, he suggests an urgent meeting to devise modalities to overcome the RBI problem including operationalization of the SEOI mechanism in this particular context, between Pakistan and UAE competent authorities, either in Islamabad or the UAE in the 1st half of November, 2019.It is relevant to mention here that Iqama holders obtained residence in the UAE due to which their accounts/balances and other tax-related information is not shared with Pakistani side. Under automatic exchange of information from Organisation for Economic Cooperation and Development (OECD), Pakistan gets information from 29 jurisdictions and now it increased to 44 countries but the data obtained from the UAE was found highly insignificant.One FBR official said that they scrutinised data by running two software, including one got from UK, to get information that could be converted into taxability. Instead of sending notices to owners of meager amounts, the FBR found 400 cases who owned $100,000 into their accounts. Now again he said the FBR would send tax notices to one or two hundred people who own major investments into UAE.The Residence by Investment (RBI) and Citizenship by Investment (CBI) schemes are allegedly misused by potential tax-evaders from all over the world to circumvent reporting of bank and financial account information under the Common Reporting Standards (CRS) thereby putting at risk the very integrity of the system that has been established by the international community with much efforts and investment.
from The News International - National https://ift.tt/2BRD2V1
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