ISLAMABAD: The Swiss authorities have not enthusiastically welcomed Pakistan’s request to recover the untaxed billions of dollars of Pakistanis money stowed away illegally in Swiss banks.
A senior-level FBR team, which recently visited Switzerland, has kick-started Islamabad’s move to recover the untaxed billions of dollars that Pakistanis put away illegally in the Swiss banks but it is expected to be a long-drawn process.
“The Swiss authorities appear dragging their feet on the issue but Pakistan has taken the first step of re-negotiating the avoidence of Double Taxation Agreement (DTA),” a government source said, adding that the Swiss banks have a lot of influence on their government.
It is said that first Pakistan and Switzerland would re-negotiate the DTA for the purpose of getting its Clause 26 amended, which will open the door for process of information sharing.There would be a lot more to be done later and it is believed that the process may take years. The sources said that so far only the US, the UK and Germany have been able to get the untaxed billions of their respective nationals from the Swiss banks. In the case of the US, it took them four to five years, the source said.
The Government of Pakistan believes that around US$200 billion of Pakistani nationals is stowed away illegally in the central European country’s secretive banking system.The government is working to seek help through the new Swiss laws to exchange confidential information about the ill-gotten monies stashed behind the secrecy wall of Switzerland’s banking system. Under a new Swiss law known as The Restitution of Illicit Asset Act, the Swiss government allows the exchange of confidential information about the money deposited in its banks.
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 Swiss authorities have expressed willingness to renegotiate the current Pak-Swiss agreement. The two sides met last month to formally kick-start the process.
Pakistan’s DTA with Switzerland was signed in 2005 and enforced in 2008. The DTA is, however, deficient and does not enable either country to exchange meaningful tax information about their respective taxpayers. Now the two sides would re-negotiate the DTA’s Clause 26 for the required information sharing.
It is assumed that Pakistani nationals have over $200 billion stashed in the 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.