Islamabad [Pakistan], Dec. 16 : A wave of anxiety has swept through Pakistan's wealthy elite as last week account holders in a major UAE bank received letters stating they will be required to furnish information "with a view to determining where they are resident for tax purposes".
The effort is part of a programme to bring UAE banks into compliance with what is called the Common Reporting Standard (CRS), agreed upon by a group of signatory countries under the umbrella of the Organisation for Economic Co-operation and Development (OECD), which aims to curb tax evasion through offshore havens, reports the Dawn.
The bankers in Dubai who are directly involved in ensuring compliance matters said that as of January 1, 2017, all existing high net worth individuals will be asked to furnish details of their permanent residency and the citizenship they hold, and their tax status in their own countries.
Also, all new customers for any bank or other financial institutions (including brokerage) will be required to furnish the same information regardless of their net worth.
From January 1, 2018, this requirement will become mandatory for everyone "regardless of who you are".
As banks and other financial institutions remain in discussion with the country's central bank, some changes can still be expected in the detail.
Some unofficially sourced data from the Dubai Land Authority has fed a steady news flow claiming that more than USD two billion has flowed into Dubai real estate by Pakistanis every year for the past three years.
Since the data apparently includes overseas Pakistanis, it may not tell the story of massive capital flight from the country that many impute to it.
Even though Pakistan is not yet a signatory to the CRS, it has signed the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters in September this year as well as an earlier framework that allows for the automatic exchange of tax-related information.
Since 2009, the OECD has been working on a new global framework that allows for rapid exchange of tax-related information of individuals and companies, including account information as well as beneficial ownership of companies.