Indian tax centres in UAE not imminent

Ambassador says there are no definite plans and no time frame to install facilities in the country to address expatriate Indian taxes.

ABU DHABI // Taxation centres for Indian expatriates in the UAE have been discussed but are “not in the immediate future,” said the Indian ambassador to the UAE.

After reports emerged that new centres would be created in the next two months to monitor tax evasion by non-resident Indians, MK Lokesh, the ambassador, said that although such a proposal was in the “preliminary stages,” there was “no definite time frame on this”.

"The details are still being worked out," Mr Lokesh said.

The new offices would require approval by several Indian ministries if they went ahead, including the ministry of finance and external affairs.

“It is not going to be a police office,” Mr Lokesh said.

Two tax offices that opened in Mauritius and Singapore last year are being used to find Indian tax evaders who stash their money in foreign bank accounts.

This month, the Indian government announced that they would open several more overseas tax offices. In the next two months, offices are expected to open in the United States, United Kingdom, Germany, France, The Netherlands, Japan and Cyprus, where Indian tax authorities will work with local officers.

Mr Lokesh also added that any such proposals are unrelated to recent debates in India regarding the taxation of expatriates. He pointed out that a taxation agreement between the two countries already exists.

However, the new taxation laws, which would be implemented in 2012 if passed, would affect the lives of millions of Indians who live in the Gulf, allowing them to be taxed up to 20 per cent regardless of income. Non-resident Indians (NRIs) would be liable for income tax if they spent more than 60 days a year in India, or 365 days in the preceding four years.

That is a sharp reduction from the current limit of 182 days.

“The NRIs need to make formal demands to the Indian government if they have any apprehensions,” said Mr Lokesh. “They have not understood it correctly. They will not be heavily taxed under Indian law.”