ISLAMABAD: Pakistan has been unable to get much cooperation from 11 countries known as tax havens around the world to share information on offshore wealth amid a global clampdown on tax evasion.

Under the Organisation for Economic Cooperation and Development’s (OECD) new automatic exchange of information programme, effective since Sept 1, 2018, more than 101 countries have agreed for automatic exchange of financial information.

The list of intended exchange partners is being finalised pending negotiations among member countries in the past couple of years.

Official admits Switzerland has reservations over Pakistan’s system of handling of stashed wealth data

As per the agreed list, the tax haven countries which apparently did not show willingness to share information with Pakistan are Anguilla, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Hong Kong, Mauritius, Niue, Panama and Samoa.

Pakistan is currently investigating data of three leaks about Pakistani offshore investments and — two leaks related to tax havens — Panama and Bahamas — which did not offer to share automatic information with Pakistan under the new tax convention.

The leaks only identify the names of people who have investments in tax havens but the challenge for the tax authorities was to obtain details of assets accumulated by those individuals, which were not shared in such leaks.

The only tax haven countries which showed willingness to share information about Pakistani investments are Curacao, Cyprus, Ireland, Jersey, Luxembourg, the Netherlands, Seychelles and Singapore.

There has been a lot of talk about stashed funds parked in a few destinations like British Virgin Islands, Cook Islands, Singapore, the Netherlands, the UK, the UAE and Switzerland. A few countries have already ratified the convention to share such information with Pakistan. But the dream to bring back funds of Pakistanis in Swiss banks will remain unachievable.

Switzerland has so far not offered any exchange of automatic information to Pakistan on bank accounts under the OECD convention. Though Switzerland has offered the same to 60 countries including India under the multilateral tax convention.

Federal Board of Revenue official spokesperson Dr Mohammad Iqbal told Dawn that the FBR had sent two letters to Switzerland requesting them to also offer Pakistan automatic exchange of information under the OECD convention. He admitted that Switzerland had reservations about Pakistan’s system of handling of such data. He said that the FBR had informed the Swiss authorities about the system in place at the bureau now. “We are expecting to get the offer from Switzerland,” the official said.

Asked why the FBR had failed to convince the remaining tax haven countries, the spokesperson said they had succeeded to a large extent in making other countries to share information. The remaining countries, he added, will also be engaged at a later stage.

He said the real issue is the processing of the data. “We are already receiving information from other countries.”

Pakistan will share data from approximately 38 countries this year, while unilateral information from 10 countries has already been received. Almost 17 countries will share information with Pakistan from September next year while another three countries from September 2020.

The FBR has established six automatic exchanges of information zones (AEOIs) for processing cases received in the process. These zones have been established at Regional Tax Offices (RTO) in various parts of the country, each of which will cater to the cases that fall under their respective jurisdiction.

Six commissioners of the Inland Revenue will be posted as focal persons for collecting data from banks regarding non-residents.

Moreover, an isolated centre, dedicated for the receipt of information and data processing has been established at the FBR headquarters. Selected officers are allowed to access this centre to ensure transparency. For assigning jurisdiction to AEOI cases, the FBR has already notified rules for reporting of data by financial institutions and working of AEOIs.

Published in Dawn, October 7th, 2018