The idea of Central Board of Revenue (CBR) to approach the United Arab Emirates government to obtain details of property held by Pakistani nationals in the UAE is not practicable due to the absence of legal backing and flaws in the Pakistani tax laws.
Official sources told Business Recorder here on Thursday that the UAE government offers residential visas to those Pakistanis, who purchase flats and any other property in that country. Once these Pakistanis obtain property ownership, the local tax laws of the UAE become applicable on those people. In most of the cases, such visa offers are advertised in the press.
"Why the UAE government would provide the details of their residents to the CBR. Even if the CBR demands information under the agreement on "avoidance of double taxation and fiscal evasion", the government is not bound to give such type of information to the Pakistani tax authorities? The idea is based on assumption that the CBR would be able to get such information," the officials said.
They said that the department under the Universal Self-Assessment Scheme (USAS) accepted certain income tax returns of the taxpayers declaring less income. This gives an opportunity to the taxpayers to purchase such property abroad from the undeclared/concealed income.
In some cases, the higher courts turned down the assessments done by the Income Tax Department. Thus, strict tax laws are needed for obtaining the source of income of the taxpayers.
The officials said that presently there is no bar on transfer of money abroad through Hundi or Hawala System. There is no law to check illicit international transfer of money. In the absence of such a legal backing, it is impossible to obtain details of purchases made aboard.
Secondly, the CBR is not legally empowered to obtain details of the Pakistani buyers in the UAE from their promoters. The whole exercise appeared to be useless as people are buying expensive property in all major cities of Pakistan, but the department is not ready to probe local cases. It is not an appropriate idea to contact the UAE government in this regard.
They said that the CBR's exercise to obtain real estate investment record from the provinces and its subsequent computerisation is also not an easy task. The CBR had asked the income tax commissioners to obtain such investment records from the provinces, but it could not materialise.
They added that the management of the property titles (ownership of property) is also necessary for documentation of the real estate sector in Pakistan. Instead of district management, an independent department is needed for the management of transfer of property, the sources said.