Pakistanis welcome tax exemption

ABU DHABI // Pakistani expatriates have been reassured that new taxation laws will not apply to them. Anti-corruption campaign group Transparency International (TI) said Pakistanis residing in the UAE need not worry about double taxation laws.

Syed Gilani, former chairman of TI, said that Pakistani laws state that anyone working outside the country for more than six months is exempted from filing wealth tax returns.

“The double taxation law applies to those Pakistanis who are living and earning in Pakistan but investing in the UAE or in any other part of the world,” said Mr Gilani.

“According to the law, Pakistanis are allowed to buy overseas properties. However, they must declare it in their wealth tax form in the annual income tax return.

“Pakistan can impose minimum 10 per cent tax.” The term double taxation applies to resident of one country having income and gains from another, meaning they may have to pay tax on the same income in both the countries.

Pakistan and UAE have signed a double taxation treaty in 1993.

Mr Gilani said many corporations and business leaders from Pakistan misuse the law, and invest millions outside Pakistan in the name of relatives who are either non-residents or foreign nationals.

“We need to plug this loophole,” he said.

Pakistan’s government is serious about taxing properties owned by Pakistanis in the UAE but there are practical problems.

“However, by next year, it will be possible because the Global Forum’s [the policy discussion mechanism of the Organisation for Economic Co-operation and Development] automatic exchange of information will be activated,” said an official at the finance ministry in Islamabad, who asked not to be identified.

“So if today, we are facing problems in acquiring complete information, by next year, the situation would not be the same as every country would be legally bound to share information with each other automatically.

“So its just about another 12 months, then things would be difficult for all those who are running away from sharing their assets with their respective governments for taxation purposes,” he said.

Ejaz Khan, a property agent in Dubai, said there were lots of customers who come from Pakistan and buy large numbers of properties in Dubai.

“These days, most of the Pakistani investors are those who reside in the UAE,” said Mr Khan, who has been working in the industry for six years.