Dubai: New Delhi will soon set up an Income Tax office in Abu Dhabi to keep an eye on investments made by wealthy Indians in the emirates, XPRESS can exclusively reveal. The UAE is among seven countries chosen for the project.
"There is a proposal to set up an overseas Income Tax unit in Abu Dhabi," Indian Ambassador to the UAE M.K. Lokesh told XPRESS on Sunday, adding that its scope and functions are being determined.
Asked when the unit will come into force, he said, "It is not at a stage where I can give you more details. If the proposal materialises, we will have to take several approvals, including those of the local authorities here."
However, sources told XPRESS the income-tax overseas unit is likely to start functioning in two months. Similar offices will operate from the United States, United Kingdom, Germany, France, Netherlands, Japan and Cyprus. Two such units already exist in Mauritius and Singapore.
The need for such units, the sources said, is to facilitate investigations into cases of tax evasion by rich Indian individuals and institutions and ensure their compliance with the Double Taxation Avoidance Agreement and other treaties on exchange of financial information.
The sources said the step had been necessitated as an increasing number of Indians are making investments in countries like the UAE without declaring them.
Recently, the Income Tax Department slapped a notice on Bollywood star Shah Rukh Khan for not paying tax on a Dh14.4 million villa in Palm Jumeirah.
Indian nationals, who are amongst the top investors in the real estate market of the UAE, also figure amongst the top high networth individuals (HNIs) in the emirates.
According to some estimates, they have invested over Dh6.5 billion in the real estate sector in Dubai alone. While the majority of the buyers are Indians living within the UAE, 10 per cent of them are believed to be living in India or otherwise.
The move to set up the Income Tax cell comes close on the heels of the proposed changes in the new Indian Direct Tax Code (DTC) 2010, which makes NRIs liable to pay tax if they stay in India for over 60 days a year, instead of the current stipulation of 182 days under the Income-Tax Act.
If passed, the Direct Tax Code (DTC) Bill, tabled in Parliament last year, will come into force from April 1, 2012.
Gulf News
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