FBR threatens terminating tax treaty with UAE

FBR threatens terminating tax treaty with UAE

ISLAMABAD: Federal Board of Revenue (FBR) has threatened to terminate avoidance of double tax treaty with the United Arab Emirates (UAE) for not sharing information of Pakistanis having assets in that country.

In a statement on Monday, the FBR spokesman said that the tax authorities had once again asked UAE authorities to provide information of Pakistanis having iqama (residential permit) in the UAE.

The spokesman said that the FBR was conducting scrutiny of those Pakistanis who transferred money illegally to other destinations by evading tax money.

The spokesman said that those Pakistanis fraudulently shifted the money and concealed by taking advantage of iqama.

The FBR wrote another memorandum to the UAE authorities to provide details otherwise Pakistan would consider the other option to terminate the avoidance of double taxation treaty.

Pakistan and UAE signed a full scope tax treaty on February 7, 1993 and it was come into force on November 30, 1994. The treaty became effective in Pakistan from July 01, 1995 and in the UAE on January 01, 1995.

Under Article 27 of the Treaty both the states are bound to exchange information in case of fiscal fraud and tax evasion.

The Article 27 is as follow:

01. The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, in so far as the taxation thereunder is not contrary to the Convention, in particular for the prevention of fraud or evasion of such taxes.

Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State.

However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons of authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Convention.

Such persons or authorities shall use the information only for such purposes but may, disclose the information in public court proceedings or in judicial decisions.

The competent authorities shall, through consultations, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including where appropriate, exchange of information regarding tax avoidance.

2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both.

The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis.

3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State;

b) to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

c) to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

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