Tax Authorities Increase Scrutiny on Undisclosed Property in Dubai

Tax authorities are increasing pressure on individuals who attempt to conceal their foreign assets. A recent leak revealed that in 2020, a significant number of individuals collectively owned 1,721 properties in Dubai. The combined value of this real estate was estimated to be between €600 and €700 million.

What was notable was that many of these assets were not declared to the tax authorities, and the owners seemingly did not have the income to justify such investments.

The central question now is the source of these funds. Possible explanations include undeclared income, unreported cryptocurrency gains, or undisclosed gifts. A tax lawyer emphasises that in such cases, the tax authorities can still pursue back taxes. On top of this, interest and a substantial penalty may be applied.

Property Ownership in Dubai (2020)

Voluntary Disclosure Can Prevent Greater Issues

Tax residents who own property in Dubai are currently being actively approached with questions about their assets. Those who ignore these inquiries risk facing severe measures. A lawyer points out that the tax authorities can, in such a case, issue an information request. This reverses the burden of proof, requiring the taxpayer to demonstrate that the authority’s assessment is incorrect.

Furthermore, civil proceedings may be initiated, compelling individuals through the courts to provide information. In extreme cases, the public prosecutor may become involved, and investigative authorities may be deployed to seize documents.

Recently released documents indicate that tax authorities are becoming less hesitant and are taking legal action more frequently. According to one lawyer, this is intended to send a clear signal that fraud will be punished. For individuals who have undisclosed assets, another lawyer suggests it is prudent to take the initiative themselves. While a penalty is likely to remain, it is often reduced when someone comes forward voluntarily.