FBR wants to bring back billions in Swiss banks

The Pakistan Muslim League-Nawaz (PML-N) government, which is bent upon reopening the Swiss cases, faces a gigantic task as a summary has been moved by the FBR offering solutions on how to recover all the plundered wealth parked in the Swiss banks, a proposal shot down thrice during the Pakistan People’s Party (PPP) government.

According to media reports, the summary forwarded to Finance Minister Ishaq Dar seeks the cabinet’s approval for upgrading the Double Taxation Agreement (DTA) with the Swiss government in order to obtain information of all Pakistanis having stashed billions in the Swiss banks, disclosed a Finance Ministry official.

The official said the summary was moved almost a week back and had not yet been put before the minister who is busy fixing the circular debt and other urgent issues. Dar was not available for comments.

A recent Swiss National Bank report said Pakistani citizens have Rs152.9 billion deposited in the Swiss banks that is more than the Indian money that recorded a significant cut after New Delhi signed a DTA to track down accounts of its citizens there.

Once Pakistan enters into an agreement, it will be able to get hold of all the deposited money there.The FBR officials are hesitant to discuss the issue. However, the officers who served there during the PPP government said the initiative was first taken when Salman Siddique was the chairman. A summary twice moved to him was thrown under the carpet and the third attempt was made during Ali Arshad Hakeem’s tenure as chairman but met the same fate.

Ali Arshad Hakeem, however, insisted that it was moved to the then Finance Minister Hafeez Shaikh but he said he was not aware of any proposal that passed his table. The fourth attempt was made during the caretaker set-up when Ansar Javed, then chairman FBR, moved a summary and the caretaker finance ministry’s adviser approved it for putting before the cabinet. However, it could not be done.

Shortly before his retirement, Ansar again moved it after the new government was installed and Dar took charge as the finance minister.India has already succeeded in tracking down accounts by upgrading the DTA agreement and putting two senior tax officials in Geneva who coordinate with Swiss banks about their citizens’ accounts, an exercise that heavily rewarded the neighboring country as a significant cut has been seen in the deposits of Indians there.

Other than India, the United States, United Kingdom, several European countries and Qatar have signed agreements with the Swiss government in order to exchange information about the clients-citizens of signatory states. It was done after the Swiss government was pressurised by the Western countries to amend laws allowing international tax administration to track illegal funds deposited in Swiss Banks. Responding to the mounting pressure, the Swiss Parliament passed a law in October 2010 allowing bank administrations to entertain international requests for the exchange of information.

Pakistan’s DTA with Switzerland was signed in 2005 and enforced in 2008 (well before the Swiss Parliament passed law “The Return of Illicit Acts” allowing exchange of information with other countries), hence it needed to be revised and updated, said a ministry official.

A recent report by the Swiss National Bank revealed that more Pakistanis have funds parked in Swiss banks than Indians, saying that by December 2012, Rs152.9 billion parked in banks there belonged to Pakistani individuals. Earlier, a director of Credit Suisse AG Bank said $97 billion deposited in his bank belonged to Pakistani citizens.

The Swiss National Bank further noted a significant decline in foreign money from different countries saying these deposits have reached the lowest level since 2002 as it is no more a safe haven for the plundered wealth following the information-sharing agreements.