ISLAMABAD: The Federal Board of Revenue (FBR) has started collecting information about the money stashed in foreign banks, including Switzerland. These measures have been taken in the light of directions of the Supreme Court which is conducting hearing of a similar case nowadays.
Pakistan and Switzerland had signed Convention on Avoidance of Double Taxation in 2005 which was enforced in 2008. However, this agreement contained the old version of Article on exchange of information which was deficient in many ways.
These measures include the revision of the Avoidance of Double Taxation Agreement with Switzerland to benefit out of new Swiss Policy which allows Swiss government to exchange heretofore confidential information about ill-gotten monies stashed up in the clandestine Swiss banking industry for tax purposes.
“The operational design through which advantage of the changes in Swiss laws could be taken is by way of exchange of information. Exchange of tax information is the new mechanism for the said purpose,” sources at FBR told Customs Today.
The sources said that exchange of information for tax purposes was possible through renegotiation of the Avoidance of Double Taxation Agreement (ADTA) with Switzerland and updating its article on exchange of information with the latest Article 26 of the OECD Model Tax Convention, which has also been adopted in the UN Model Tax Convention.
The sources said that the world was moving fast towards spontaneous and automatic exchange of information. The spontaneous exchange caters for the transfer of information to the concerned jurisdiction as and when it comes into the knowledge of the jurisdiction holding such information. However, the source said that the automatic exchange transfer of data on each year among the jurisdictions on the financial accounts of the corresponding tax residents of such jurisdictions.
