The Federal Board of Revenue (FBR) is likely to approach Ministry of Finance and Industry of the United Arab Emirates (UAE) seeking information about M/s. Axact (Private) Limited from UAE's tax authorities, as it has claimed huge exempt income on the pretext of exporting software to its parent company in the UAE.
Sources told Business Recorder here on Tuesday that the FBR is legally empowered to exchange information under Article 27 of the Pak-UAE Avoidance of Double Taxation Agreement 1993. In this regard, the FBR is expected to approach the UAE government for obtaining data under convention on Avoidance of Double Taxation Agreement. The information would be helpful in determining the actual nature of the company's activities.
According to sources, the company is claiming to be engaged in the business of software exports, IT and IT enabled services. During examination of record, its tax declarations for the past five years revealed that it has claimed huge exempt income on the pretext of making exports of software to its parent company, Axact FZ LLC, UAE, shown as holding 99.99% shares of Axact (Private) Limited Pakistan. The company was confronted by the tax department, but has only provided superficial documentation without any details regarding the nature of software, the ultimate customers, and details of its parent company. Apparently, it seems that no software is actually being exported and the arrangement has been made only for the purpose of money laundering, tax department alleged.
Against this backdrop, FBR may ask the UAE tax authorities to provide requisite information in this regard. If the FBR approaches the UAE government, the following requested information and documents are required from July 1, 2008 to June 30, 2014: Copy of the application for registration of the company along with copies of supporting documents attached with the application; date of registration of the company; address and telephone number(s), available on record; approved and Paid Up Capital; name(s) of the owners, along with their addresses; copies of its audited accounts for the last 5 years; bank account number(s) name and contact numbers of bank; copies of bank statements from July 1, 2008 to 30th June 2014 and any other information that can be helpful in determination of the actual nature and activities of the company.
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