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November 20, 2019

Hidden wealth

Newspost

 
November 20, 2019

Money laundering means hiding illegal money obtained by illegal activities, while tax avoidance means arranging financial affairs to minimize tax liabilities within the law. Both of these activities are used by the richest people and companies of the world to hide their wealth. All of this was highlighted during the 'Panama Leaks' when data about 'off-shore accounts' was released online. It was because of the Panama Leaks that in 2014 the Organization for Economic Corporation and Development (OECD) came up with the Common Reporting Standards (CRS) so countries can exchange information about the wealth of their citizens, so each country can properly tax their citizens. Most countries including China, the UK, EU, Russia and even Pakistan have started reporting under the CRS, but the US and some other under developed countries have not signed up to CRS yet.

It is because of this discrepancy that all the wealthy in the world are now moving their wealth to the US to avoid taxes. Ironically, the US has a law called FATCA that enforces all countries to submit financial data to the US but does not allow the US to give data to other countries. Corruption in government contracts, illegal drug business and other illegal businesses will always flourish around the world because the culprits have a place to hide their wealth easily. I therefore think that the government of Pakistan should ask all the signatories of CRS to use the FATF or OECD and other forums to pressure the USAto also enforce CRS rules and help stop money-laundering and tax avoidance for everyone.

Engr Shahryar Khan Baseer

Peshawar

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