Minister of State for Finance Revenue and Economic Affairs Rana Muhammad Afzal Khan on Wednesday informed the National Assembly that Pakistan has signed a bilateral agreement with Swiss government to obtain Pakistanis secret wealth in Swiss banks.

Responding to various questions during question hour he said, “Various measures have been taken by the government to obtain information about the Pakistanis wealth/assets lying in secret deposits and investments in Swiss Banks”. He said that process had been started by the government in 2013.

The minister said, “Soon after taking over, the government started efforts for getting information regarding money stashed in the banks of foreign jurisdictions including Switzerland. The government was aware of and has worked seriously, to get benefit of the 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.”

Rana Afzal said that this 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.

“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” he added.

The minister said “The new Aicle 26 of the OECD Model Tax Convention extends the scope of exchange of information beyond the information available with tax administration in the normal course of business. It provides that the Contracting States shall exchange information and no state should decline to provide information merely for the reason that such information is of no interest to it, or because the information is held by a bank or other financial institution.”

According to the new Article, the Contracting States shall exchange such information on request as is foreseeably relevant for carrying out provisions of the Avoidance of Double Taxation Agreement or required for the administration or enforcement of domestic tax laws of the requesting state.

In August 2013, the government decided to review the existing Avoidance of Double Taxation Agreement, particularly its Article on the Exchange of Information, and a Summary to this effect was submitted to the Cabinet, he added

The minister said that in September 2013, the Cabinet granted approval to re-negotiate the Avoidance of Double Taxation Agreement with Switzerland.

Accordingly, the matter was taken-up with Switzerland through diplomatic channels for date and venue of negotiations. In August 2014, negotiations were held for revision of the exiting treaty. However, he said, Switzerland was seeking a number of concessions in exchange of the Article on Exchange of Information which went against the national tax policy.

The minister said that in December 2014, Pakistan took up the matter with Switzerland for the second round of negotiations in order to settle the issues with mutual consent. Pakistan consistently approached Switzerland for the second round of negotiations, he said

He said in April 2016, the Swiss authorities finally communicated their consent for the second round of negotiations and in June, 2016, the second round of negotiations was held and the Agreement was finalized with Switzerland which included the Article on exchange of information without giving away anything by Pakistan.

Rana Afzal said in March, 2017, the initialed Agreement was signed in Pakistan with the Ambassador of Switzerland and in May 2017. The Cabinet ratified the revised Agreement and the internal procedure was completed in Pakistan. The agreement will come into force as soon as internal procedures are completed by Switzerland, he added.

Responding to another question he said the government has taken many measures not only to protect the local industry but also to incentive it by extending concessions exemptions.