ISLAMABAD: After Federal Minister for Finance Ishaq Dar took a ‘principled stand’, Pakistani and Swiss authorities are scheduled to ink a revised convention on avoidance of double taxation agreement today (Tuesday) here in the federal capital, enabling the Pakistani authorities to get information about dirty untaxed money of $200 billion stashed in Swiss banks accounts.
Some deliberate efforts were made for using ‘dillydallying tactics’ for avoiding inking of this revised agreement but after exchange of a number of official communications, finally both sides agreed to ink the revised agreement on Tuesday (today).
In a major breakthrough, the revised avoidance of double taxation agreement on exchange of information about bank accounts will be signed in Islamabad at 3pm on March 21, 2017 (today) between Swiss Ambassador in Pakistan and Chairman Federal Board of Revenue (FBR) Dr Mohammad Irshad.
It is generally believed in Pakistan that the money earned through alleged corruption in the range of $50 to $200 billion was lying in Swiss bank accounts by politicians, bureaucrats and others.
Now Prime Minister Nawaz Sharif had forwarded a summary to president for authorising the chairman FBR for signing revised double taxation and exchange of information with Switzerland on behalf of Pakistan. Earlier, the president of Pakistan had authorised Federal Minister for Finance Ishaq Dar to ink this agreement.
Finance Minister Ishaq Dar had stated on the floor of parliament that Pakistan and Switzerland would be signing a revised agreement on March 21, 2017 related to exchange of information about bank accounts.
This statement of Finance Minister Ishaq Dar made headlines in all print and electronic media after which Swiss authorities got panicked. In an official communication sent out to Pakistani side, they proposed that the concerned minister was engaged on the proposed date so both sides could hold parleys on this issue in Washington DC on the sidelines of upcoming annual spring meeting of the IMF/WB scheduled to be held from April 21 to 23, 2017.
Ishaq Dar took a principled stand by arguing that he had stated on the floor of parliament that the revised agreement would be signed on March 21, 2017 so his words should be honored. After dillydallying tactics, finally both sides agreed that the Swiss ambassador and chairman FBR will sign the revised avoidance of double taxation agreement on behalf of their states on March 21, 2017 here at Islamabad.
The new article, upon formal signing of the avoidance of double taxation agreement (ADTA), will bind the Swiss authorities to exchange all requested information, including confidential bank account information. Information requested under new article cannot be refused or declined on the mere pretext that the same is not of any use for their domestic taxation and is held by any other authority and not available with the tax authorities.
The Article 26 of the Organization for Economic Cooperation and Development (OECD) model could help access to bank accounts of citizens and their assets, but the information received or exchanged will be treated as secret and can only be disclosed to persons or authorities including courts and administrative bodies like tax department for assessment purposes.
In the past, the Cabinet had given its approval for renegotiating Pakistan-Switzerland Avoidance of Double Taxation Agreement (DTA). The existing Pakistan-Switzerland DTA will be re-negotiated and upgraded in line with the latest trends in all important areas of international co-operation. Pakistan and Switzerland signed Convention on Avoidance of Double Taxation in 2005 which was enforced in 2008.
Pakistan had already signed the Multilateral Convention on Tax Matters with OECD on September 14, 2016 which is going to be operationalised next year. Pakistan will be among the list of countries which are going to join the first batch where this agreement would become operational in early 2018.
Pakistan is the 104th member of the organization. About 90 countries have agreed to operationalise it next year. These countries indicated on June 7, 2016 that those countries including Pakistan, whose system is compatible, are ready to start the spontaneous exchange of information. They decided to start operational system from next year.
After making this convention operational, it will make impossible to keep tax evaded money in these countries. Pakistan would take benefit from the exchange of information if proper homework was done to get desired information. After this agreement Pakistan would become a member of a global forum on exchange of tax information of offshore accounts and investments, the official concluded.
