Indians who considered Dubai a safe haven might have to reconsider their strategies, with the UAE government all set to modify its tax laws. Indian authorities will be able to access bank account information of individuals from January 2018, according to a report by Economic Times.
Dubai was a preferred destination among Indians who wished to evade tax, routing money to banks through different means. While this was easily achieved in the past, banks will now keep a close eye on documents to open accounts.
Individuals looking to open company bank accounts will now have to provide their tax ID card (PAN) and passport details, in addition to presenting the shareholders of said company before they can open an account.
Increased scrutiny has resulted in an increase in the time taken to open an account. Banks now take around a month to open such accounts, a multifold increase from the 3-4 days they previously took.
A number of Indians parked unaccounted wealth in Dubai by purchasing shares of shell companies. The RBI permits resident individuals to invest a maximum of $2,50,000 per year in securities and properties abroad. The shares purchased could be a source for individuals to stash black money in Dubai.
Individuals with such wealth, however, are finding new ways to safeguard their money. One such method involves the use of “insurance wrappers”. These are nothing but life insurance policies which an individual can purchase, either in his/her own name or someone else’s name. Individuals pay a single premium to purchase such policies (which is often the unaccounted wealth). The policy typically offers returns once it matures/in the case of death of the individual.
While a number of individuals are looking towards professionals to sort out their money, income tax authorities will be keeping a close eye on bank accounts come January 2018.