Patience on a monument

Pakistan has not extracted sufficient information from 11 countries known as tax havens around the world

For years lax governments in the region have been unable to resist the temptation of counting on the offshore wealth of their citizens as guaranteed money in the bank. The truth is much more complicated and leaves most in a painful legal maze of excruciating proportions.

Despite global conditions warming up to a tougher clampdown on tax evasion, Pakistan just has not found the resolve to extract sufficient information from 11 countries known as tax havens around the world. Such an exchange of financial information ought to be automatic under the Under the Organisation for Economic Cooperation and Development’s programme that a hundred countries or have ratified so far.

Sharing such data with countries like Pakistan is problematic because tax havens like Switzerland or the likes of Bahamas, Bermuda, British Virgin Islands, Cayman Islands, Hong Kong, Mauritius, Niue, Panama and Samoa have no faith in the country’s tax machinery and what it intends to do with the stashed wealth data. Perhaps to rid them of those fears, Pakistan ought to have signed an agreement ruling out any mishandling of the data. This is easier said than done. The biggest challenge of course is to obtain details of assets accumulated by those individuals, which were not shared in offshore investment leaks.

For Pakistani businesses to return to Pakistani shores, there is the clear advantage of ridding themselves of the unnecessary burdens, costs and uncertainties of opening themselves up to offshore legal systems. It is fair that shareholders in a Pakistani business are taxed on their gains in the same manner, irrespective of whether they are resident or non-resident investors.

As much as we would like to hazard a guess, it is nigh impossible to say for certain the quantity of black money that is deposited in foreign banks by Pakistanis. This is because Pakistani agencies have no power or access to relevant original documents of those countries. Since one doesn’t have the reliable data, there is little point in speculating over the figure. If we expect the PTI to deliver on its promise of recovering all wealth concealed abroad, we must bank on weeding out inefficiencies in our economic policies. We have to invest on long-term solutions that revolve around a systematic approach. We should also be extremely patient.

Published in The Express Tribune, October 9^th, 2018.

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