ISLAMABAD: The request for sharing data was made through a formal letter sent by the Federal Board of Revenue (FBR) to the UAE finance ministry. The country’s top tax machinery has sent several rejoinders since October this year, but the UAE finance ministry has not responded.
The FBR warned that “Pakistan would be constrained to seriously consider rolling out appropriate measures, including termination of Pakistan-UAE avoidance of double taxation agreement, at an early date in case data is still not shared”.
Several Pakistani iqama holders have evaded taxes and put their money in the UAE as they had also deceived UAE for keeping their untaxed wealth, the letter further states. The FBR in its letter said that such delinquent Pakistani nationals had not only siphoned off funds out of the country and parked them in the UAE, but also effectively circumvented the OECD-sponsored common reporting standard exchange of bank and financial account information.
It regretted that the UAE finance ministry had not so far responded to FBR’s all earlier written requests in this regard. The letter further stated that exchange of information under OECD framework was aimed at bringing transparency in international taxation system and it was also meant to place an effective mechanism against tax evasion.
The best inter-nation relationships are mutually responsive, symbiotic and empathetic, and are the product of superior diplomatic wisdom, the FBR letter stated. 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. While residence and citizenship by investment (CBI/RBI) schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard (CRS).