News Column

Pak officials to fly for Zurich for talks on money stashed in Swiss banks by Aug 24

August 4, 2014

A high level delegation comprising Federal Board of Revenue (FBR) and Ministry of Finance (MOF) officials is likely to depart for Zurich, the largest city of Switzerland by August 24 this month to initiate talks on a new tax treaty in the hope of retrieving state assets worth estimated $ 200 billion, illegally stashed in the European country's secretive banking system, a source in Ministry of Finance revealed.

The Source claimed that the talks on revised agreement with Switzerland are expected to take place from August 26 to 28, looking forward to make use of new Swiss laws to exchange confidential information about the ill-gotten funds from Pakistan secretly hoarded away in the clandestine Swiss banking industry.

The whole exercise is being carried out by Pakistan in wake of the new Swiss law known as The Restitution of Illicit Asset Act 2010 (RIAA), which now allows the Swiss government to exchange confidential information about money confidentially deposited in Swiss banks.

The Source elaborating further has mentioned that Pakistani authorities concerned are focusing to revise the current agreement with Swiss government by introducing some amendments rather vowing for some new contract, as the second option is more difficult and requires lot of time and engagements from both the sides.

The Swiss authorities have already expressed willingness to renegotiate the current Pak-Swiss agreement on the Avoidance of Double Taxation Agreements (DTAs), following a request from Islamabad.

The process of amending or renegotiating the existing Pak-Swiss Tax Treaty has already initiated and is under way.

"However, the procedure of amending the current agreement or driving some new accord (rarely expected) is not a matter of 3-4 sittings but could take years and that has already been indicated by Pakistani Finance Minister, Senator Ishaq Dar.

Country's Federal Cabinet has already given go ahead signal for renegotiating the Pakistan-Switzerland Tax Treaty on September 2013.

Islamabad's Double Taxation Agreements with Switzerland, was initially inked in 2005 and had been enforced in 2008. It includes Article 26, which creates an obligation to exchange information relevant to the correct application of tax treaties.

But in the case of this DTA it is deficient and does not enable either country to exchange meaningful tax information about their respective taxpayers.

Despite the fact that no exact figures for the amount stashed in the Switzerland's secretive banking system is available, however the Finance Minister Ishaq Dar claims that it's worth over $200 billion.

One of the directors of Credit Suisse AG Bank has stated on record that $97 billion of worth of Pakistani capital is deposited in his bank alone.

A Credit Suisse AG Bank's director has already stated on record that $ 97 billion of Pakistani capital is deposited in his bank alone.

Similarly, the then Swiss foreign minister Micheline Calmy-Rey has been reported in media reports by saying as that the figure of Pakistani money hidden in Switzerland at $200 billion.

It is worth mentioning here that his statement has never been contradicted or no refutation has been issued to his proclamation

Former president Asif Ali Zardari, who left office on September 08, 2013 after completing his tenure as a President remained under fire by the opposition on alleged corruption charges and stashing money in Swiss banks.

Even former Premier Yousuf Raza Gilani, despite facing heavy pressure from the opposition avoided requesting Swiss banks to compliance with Pakistani authorities on Secret Swiss bank's accounts.

Switzerland enacted a new law in 2011 to make it easier for countries to recover assets stolen by politicians and hidden in its banks. In early 2012, Switzerland said it had returned $1.83 billion in illicitly-placed assets to countries involved in the Arab Spring regime changes, but Pakistan's current tax agreement does not allow it to take advantage of the law.

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Source: Frontier Star (Pakistan)

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