The visit of the FBR delegation to Switzerland to discuss the double taxation agreement and convince Swiss authorities to make amendments that may ultimately lead to recovery of a reported stashed $200 billion has attracted immense interest in the Pakistani media. However, despite the optimism the recovery would be a long drawn process.
It may be mentioned here that Pakistan and Switzerland signed a double taxation agreement in July 2005 which came into force in 2008. The current negotiations would be about Organisation for Economic Cooperation and Development’s (OECD) model tax convention that Switzerland signed last year. The convention allows the exchange of tax information on Pakistan’s request.
The FBR chief of international taxes, Muhammad Ashfaq Ahmad and secretary of international taxes Sajida Kausar, have to convince the Swiss authorities that the Pakistani money in Swiss banks was illegally deposited by citizens. Swiss authorities then shared the depositors’ information with Pakistani authorities as per the article 26 of OCED’s Model Tax Convention.
Pakistan Finance Minister Ishaq Dar had stated in late July that talks would be held with Swiss authorities to help bring back $200 billion to the country.
Though Switzerland is one of the top investors in Pakistan, the most Pakistanis simply recognise it as a country where the politicians, bureaucrats, industrialists stash their ill-gotten wealth. Retrieving money from Swiss banks have long become a political slogan and no discussion and debate; political, economic, social or otherwise, is complete without mentioning Swiss banks.
The difficulty of the task can be assumed from the fact that at least 10 Swiss banks have withdrawn from a US program meant to settle a tax dispute with United States. The 10 banks who have withdrawn from the US programme are among around 100 Swiss banks who have agreed to work with the US authorities. “At least 10 banks that had decided at the end of 2013 to pay a fine have withdrawn their decision,” says a Swiss newspaper NZZ Am Sonntag.
The paper reported that said banks were convinced they had not systematically broken the US law. Also the US lawyers did not object the banks leaving the program which was brokered by the Swiss government.
