March 09 , 2017

Pakistan to get Swiss accounts’ information

Dar tells NA accord to be signed on 21st; conditions of Islamabad accepted; tax rate not to be lessened; no MFN status to Switzerland

ISLAMABAD: Minister for Finance Ishaq Dar in a policy statement in the National Assembly on Wednesday said that Pakistan would sign an agreement with Switzerland on exchange of information regarding bank accounts on the 21st of this month.

He said that the conditions presented by Pakistan were accepted by the Swiss authorities as Pakistan would not lessen the tax rates and it would not give Switzerland the status of Most Favoured Nation (MFN).

He said several meetings were held with the Swiss authorities and now they had invited Pakistan to sign the agreement. With the signing of the agreement, Pakistan would have access to Swiss bank accounts of Pakistanis who keep money there to evade taxes.

The finance minister said that Pakistan had already signed the Multilateral Convention on Tax Matters with the Organisation for Economic Cooperation and Development (OECD) on September 14, 2016 which was going to be operationalised next year. He said Pakistan was the 104th member of the organisation.

He said after the convention was operationalised, it would be impossible to keep tax evaded money in these countries. “We will also have information about illegal flow of capital to any member of the convention,” he said.

The minister said that after coming into power, the present government had started negotiations with the OECD as its membership was awarded by intent and not by invitation. “The Swiss government has offered Pakistan to sign such an agreement in the third quarter of the current month that will enable us to exchange information on tax-evaded money,” Dar said.

Dar said the process started way back in 2013 when he proposed to the federal cabinet to allow the finance ministry to enter into a new agreement with the Swiss authorities by revisiting the previous treaty of 2005 on the minimum exchange of information.

He said initially the Swiss authorities proposed strict conditions for such an agreement. “But, we continued deliberations with them that culminated in reaching an understanding for having an agreement.”

The minister said meanwhile Pakistan became the104th member of the Organisation for Economic Cooperation Development (OECD) meant for sharing information on the tax-evaded money. Over the period, many media reports said Pakistanis had $180 billion to $200 billion tax-evaded money in Swiss banks, which called for a treaty of information exchange.

“When the government approached the Swiss authorities, they placed before us some strict conditions, like cut in the tax rates, MFN (most favoured nation) status and reduction in students’ accounts limit to $14,500 from the existing $18,000,” Dar said. “Pakistan continued persuading them not to go for such conditions.”

This process continued over the previous years, though Pakistan had also been trying to become a member of OECD and Pakistan became a member of the organisation in September 2016. “Therefore, after understanding that now Pakistan will automatically get this information, they have also offered us a new agreement and I shall be going there to sign this agreement on March 21 this year,” he added.

Minister Dar said in July 2016, Pakistan had become a largely complying country for this convention and was offered membership later. “This instrument would be operational from the next year as 90 member countries out of 104 have agreed to do so.”

He said the exchange of information process will be starting from January 1, 2018. After this agreement, Pakistan would be eligible to automatically get information about the tax-evaded money. He also appreciated the role of parliament in all of this process. He hinted at the passage of an amendment in the Money Bill 2016 to enable Pakistan to become part of OECD and meet all other requirements accordingly.



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