Plans to set up an income tax office in the UAE are in the pipeline, India's Ambassador to the UAE, M K Lokesh, has said.

Lokesh confirmed that further to a decision taken by the Government of India, efforts are being made in this direction and such a centre's scope and functions are being determined.

'It is still at a preliminary stage and might take some time. However, the suggestion did not go from the Embassy but was taken in New Delhi,' he was quoted as saying in a report in The Times of India.

Reports in the local media earlier said that New Delhi wants to set up an Income Tax office in Abu Dhabi to keep an eye on investments made by wealthy Indians in the UAE, which is among seven countries chosen for the project.

According to reports, similar offices will operate in the US, the UK, Germany, France, the Netherlands, Japan and Cyprus, while two already exist in Mauritius and Singapore.

The ambassador said that once the proposal materialises, several approvals will have to be taken including those of the local authorities.

Lokesh also said that 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.