Double taxation treaty: Was the Swiss govt influenced for early ratification or not?

ISLAMABAD: Switzerland does not acknowledge the special efforts that the PTI government claims to have made to get the Double Taxation Agreement between Pakistan and Switzerland ratified from the latter.

The PTI government, however, insists that in its first cabinet meeting, the authorities concerned were directed to pursue the matter with Switzerland aggressively so that country’s money stashed in Swiss banks could be retrieved as early as possible.

Swiss authorities concerned when approached by The News said, “The ratification of the new Double Tax Treaty with Pakistan was done in the procedure usually to be followed according to Swiss constitutional law.”

Pakistan signed and ratified the Agreement in 2017 during the PML-N government but the Switzerland ratified it on November 29, 2018 during present PTI’s rule. Some top government aides recently blamed the last government for delaying the actualisation of the agreement, and took the credit of getting it done by persuading Swiss authorities.

This correspondent approached the Swiss Bilateral Tax Issues and Double Taxation Treaties Section, State Secretariat for International Finance SIF to ascertain as to what special efforts were made by the PTI government to get the fast-track ratification of the agreement from Switzerland.

Unlike Pakistan where such agreements are ratified by the cabinet, in Switzerland these bilateral treaties are required to be approved by both the chambers of the Swiss parliament. According to Swiss authorities, the country has followed the usual process to get the agreement finalised with Pakistan.

Two questions were sent to the Swiss authorities. The questions and the Swiss replies are as follows:

“Q1) Pakistan signed and ratified the Agreement in 2017. Why did Swiss authorities take so long?

Ans: According to the Swiss constitution, a double tax treaty must be approved by both chambers of the Parliament. The parliament meets four times a year. After the parliamentary approval, a referendum period of 100 days must expire. This process takes its time, but ran smooth in the case of the new double tax treaty with Pakistan. Both chambers of the parliament approved the treaty in the first round of the debate and no referendum was taken.

Q2) A Pakistani official claims that approval process of the Agreement in Switzerland was made speedily as a consequence of efforts of the present government in Islamabad. Will you please confirm whether the approval process on part of Switzerland was a routine affair or was accelerated following recent requests from government of Pakistan?

Ans: The ratification of the new double tax treaty with Pakistan was done in the procedure usually to be followed according to Swiss constitutional law.”

When a top government functionary was contacted and told about the response of the Swiss authorities, he insisted that serious efforts were made to get early ratification of the agreement from Switzerland. He, however, said that generally such efforts are made through personal and verbal requests and thus are not recognised in official files.

The official said that in the first cabinet meeting the authorities concerned had been directed to aggressively pursue the matter in order to get the agreement enforced as early as possible.

Following the directions, he said, the Swiss authorities were repeatedly contacted to get the agreement ratified from there.

Some top political functionaries of the government started taking credit for expediting ratification of the agreement with Switzerland after this newspaper had exposed the government’s claim that it had signed agreement with 26 countries for exchange of information about hidden wealth of Pakistanis in foreign lands.

In his interview with different TV channels, the prime minister had claimed the credit that his government after coming into power had signed agreements with some 26 countries for exchange of information about billions of dollars of Pakistanis parked in foreign banks.

This newspaper later reported that not even a single agreement has been signed with any country by the present regime. Instead, the information about Pakistanis wealth abroad has started flowing into Pakistan following an international convention which was signed by former finance minister Ishaq Dar in 2016. The convention became effective from September this year as was agreed earlier.

Following The News story titled, “Who misfed the PM?”, Iftikhar Durrani, PM’s aide on media said the government was hurt with headline of the story.

He said that the government would approach the Press Council of Pakistan against this correspondent. Durrani said that the media failed to understand the issue, and insisted that everything in this regard was done during the regime of PTI government.

He added that journalists are facing serious problem of understanding the issues. Durrani reiterated that on ground operational work was initiated only during the PTI government.