Mahmood Karzai, a major shareholder in the troubled Kabulbank and a brother of the president of Afghanistan, has been forced to revise his US tax returns following the sale of a Dh10 million (US$2.7m) luxury villa on Dubai's Palm Jumeirah. Speaking from his home on the Palm, Mr Karzai said he had transferred almost $300,000 in unpaid taxes to the Internal Revenue Service this week.
The Nationalrevealed on September 7 that Mr Karzai, an American citizen, had used a loan from Kabulbank to buy a villa on the Palm on July 2 2007 for about Dh7m and resold it in 2008 for more than Dh10m. He had not previously disclosed the transaction to the US government, which taxes citizens on any income above $91,500 that they earn outside the country. "I amended my 2008 taxes and paid the amount due," Mr Karzai said. "A third of my income from the sale was paid yesterday," he said, referring to a payment on Tuesday.
In an earlier interview, he said he had made the transaction to obtain a residency visa in the UAE, which at the time was granting three-year visas for home owners, and to enable his children to attend school in the country. Mr Karzai's revised taxes came after it was reported in The Wall Street Journal that he was being investigated by federal prosecutors in New York over alleged criminal activity. The investigation, originated by prosecutors in New York, is examining Mr Karzai's business activities for tax evasion, racketeering or extortion charges.
Mr Karzai said yesterday he had yet to be presented with any official notification of the investigation and that he would welcome the chance to defend his business activities. His investments have so far included a 20 per cent stake in a housing project in Kandahar and a concrete factory in Afghanistan. "I have not seen anything from the government," Mr Karzai said. "I know myself. The only thing I did not do was report this property investment. I've invested everything back in Afghanistan … The other [allegations] are ridiculous."
He said a mistake made on filing taxes was "not a criminal offence" but a civil matter. The scrutiny of Mr Karzai comes in the wake of a run on Kabulbank, the largest lender in Afghanistan, after the central bank removed the top two executives and later took control of its operations. The executives, including the chairman Sherkhan Farnood, oversaw the purchase of 15 villas and one apartment located on seven different fronds and the trunk of the Palm for $150m, records show.
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Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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