Govt sets eyes on $200b in Swiss accounts


Pakistan to engage in exchange of confidential information from Switzerland for recovery of $200b illegally deposited by Pakistanis in Swiss banks

The Government of Pakistan is looking forward to make use of the new Swiss laws for exchange of confidential information about the ill-gotten funds from Pakistan banked in the Swiss banking industry, while the Swiss authorities have also expressed willingness to renegotiate the existing Pak-Swiss agreement on the Avoidance of Double Taxation Agreements (DTAs).

These developments were revealed by the Ministry of Finance in a written statement submitted in the National Assembly on Friday.

Finance Minister Ishaq Dar said the government was in contact with the Switzerland government to recover $200 billion deposited illegally by Pakistanis in Swiss Banks.

The statement was in response to a query from Pakistan Tehreek-e-Insaf (PTI) lawmaker Dr Arif Alvi, who had asked whether the government had taken any steps to bring back the country’s assets deposited in Swiss banks.

The Ministry of Finance revealed that the federal government was seeking help 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 ministry added that amending or renegotiating the existing Pak-Swiss Tax Treaty will be a key step in reaping the benefits of the new Swiss laws.

The finance minister informed the assembly that a summary had been placed before the federal cabinet, seeking its approval for renegotiating the Pakistan-Switzerland Tax Treaty, which the cabinet approved in September 2013.

The minister added that as per procedure, Federal Board of Revenue (FBR) had taken up the matter with the Ministry of Foreign Affairs to approach the Swiss government, expressing Pakistan’s intent to renegotiate the existing Tax Treaty and to seek a suitable set of dates and choice of venue to start the negotiation at the earliest.

The minister also mentioned that the Swiss authorities have expressed willingness to renegotiate the Tax Treaty and that the FBR has accepted the Swiss proposal to hold negotiations on August 26, 2014 to upgrade the existing Pak-Swiss Tax Treaty.

In reference to the Ministry of Foreign Affairs statement about the intended changes in the existing Pak-Swiss agreement on the Avoidance of DTAs, the Embassy of Switzerland said in a letter that their authorities are ready to host a delegation and discuss possible amendments to the agreement.

The ministry said that the FBR delegation will leave for Switzerland in the last week of August to start negotiation.

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 alone.

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.