Govt to bring back money stashed in Swiss banks

Minister reveals that Swiss authorities are willing to renegotiate the Pak-Swiss agreement.

ISLAMABAD:

The government has said that it will hold talks with Switzerland over a new tax treaty in order to recover $200 billion stowed illegally in the central European country’s secretive banking system.

The government is seriously working to seek help through the new Swiss laws... to exchange heretofore confidential information about ill-gotten monies stashed behind the secrecy wall of Switzerland’s banking system, Finance Minister Ishaq Dar told the National Assembly in a written reply on Friday.



Under the new law, known as The Restitution of Illicit Asset Act 2010 (RIAA), the Swiss government allows the exchange of confidential information about the money deposited in its banks.

The finance minister added that amending or renegotiating the existing Pak-Swiss Tax Treaty — a process which has already been initiated — will be a key step in reaping the benefits of the new Swiss laws.



Ishaq Dar said that a summary was placed before the federal cabinet seeking its approval to re-negotiate the existing (deficient) Pakistan-Switzerland Tax Treaty, which was approved in September 2013.

According to the procedure, the Federal Board of Revenue (FBR) had taken up the matter with the Ministry of Foreign Affairs to approach the Swiss government, expressing Pakistan’s desire to renegotiate the existing tax treaty and seek a suitable set of dates and choice of venue to start the process.

Subsequently, the minister revealed that the Swiss authorities have expressed willingness to renegotiate the current Pak-Swiss agreement and the two sides will meet on August 26 to discuss the revised agreement.



According to the finance ministry, Pakistan’s DTA with Switzerland, signed in 2005 and enforced in 2008, does include 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.



It is assumed that Pakistani nationals have over $200 billion stashed in Swiss banks. 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.

Similarly, Micheline Calmy-Rey, the then Swiss foreign minister, is reported to have put the figure of Pakistani money hidden in Switzerland at $200 billion — a statement that has not been contradicted.

In view of this matter, Pakistan may be a net creditor to the rest of the world in the sense that external assets, measured by the stock capital flight, far exceed external liabilities, as measured by the stock external debt.

However, the ministry of finance admits that the difference is that the liability belongs to the state and the assets belong to the non-compliant citizens and the situation needs immediate corrective action and reversal.

Published in The Express Tribune, May 10^th, 2014.