Offshore wealth

With the dust over the Panama Papers yet to settle, another offshore wealth scandal is beginning to hint at the true amount of wealth that has been stashed abroad by Pakistanis. Almost four months of investigation by this media group into properties held by Pakistanis in Dubai has thrown up some alarming figures. Over 7,000 Pakistanis have bought properties worth over Rs1,100 billion in Dubai. The emirate is considered to be a safe investment hub – with few questions asked from offshore investors about the source of their money. The data shows that Pakistanis outweigh individuals from other countries in terms of investments in Dubai. The issue came to light after the Supreme Court ordered both financial bodies and security agencies to provide data on the foreign assets of Pakistanis. Similar questions have been asked by a parliamentary committee to whom no satisfactory answers have been provided as yet. The FIA has claimed that it only has a list of one hundred Pakistanis which it has been investigating for the last two years. There is no news over whether any of these individuals has actually been prosecuted. The revelation that the actual list is closer to 7,000 in just one offshore destination is a testament to the sheer incompetence of our tax authorities.

Pakistani authorities continue to claim that they are limited by the lack of bilateral agreements on finance with other countries. It seems journalists can operate with more freedom than financial investigators. It is also a wonder how the government can plan a tax amnesty scheme for the return of offshore wealth without any actual list of the individuals it is targeting. The same line was taken by Advisor on Finance Miftah Ismail when responding to questions about the Dubai properties affair. But it appears that the government has no stick to offer to anyone who does not bring back wealth into the country. Some may ask whether it is not an individual’s choice what to do with their money? The answer is yes – but only after following a range of rules that include paying and declaring taxes and any foreign assets. These rules have not been followed by an overwhelming number of those named in the lists. According to the FBR, only five percent of the owners have declared their assets in Dubai – including over two dozen parliamentarians and a number of well-known individuals. This is an issue that is likely to have major ramifications if the government takes it seriously. It will also be a test of the commitment to bring offshore money home. The ministry for finance has confirmed that details are being sought from the UAE and Switzerland. We wait and watch whether that results in concrete action.