Pakistan’s finance minister rejects allegations of tax evasion
Islamabad: Pakistan’s Finance Minister Ishaq Dar has rejected allegations by Pakistan Tehreek-e-Insaf (PTI) leader that he transferred $4 million to his son in Dubai to avoid taxes.
In an open letter to the PTI chairman Imran Khan, the finance minister also refuted the claim that he has been dragging his feet on signing Tax Avoidance Treaty with Swiss authorities to bring back ill-gotten money to Pakistan.
The finance minister said Imran’s statement was totally fallacious, highly preposterous and nothing but a figment of imagination and prima facie tainted with malafide.
Dar has further clarified that he never transferred even a single rupee from Pakistan to his son in Dubai.
On the contrary, he has in fact till date received around $4 million from his sons in Dubai, a fact which he said Imran had twisted for political mileage.
In the letter, the finance minister says: “I had gifted certain amount to my sons from out of my lawful earnings abroad, who are independent, adults, and started their professional careers in Dubai. I had also given them around $4 million as loan which has since been fully repaid (as referred above) by them through proper banking channel, meaning that the amount reached Pakistan, adding to the forex reserves of the country. Being a family transaction, with no nexus with any tax implication in Pakistan or Dubai, it is unfortunate that this transaction has been dragged in public domain to raise unsubstantiated allegations against me who pays his taxes regularly and faithfully.
“Further, being a member of the Parliament, I have been regularly depositing my returns with the tax authorities and details of all my assets have been regularly reported in my annual returns of “statement of assets and liabilities” with the Election Commission of Pakistan. Your statement therefore is not only false and fabricated but also has no nexus whatsoever with verifiable facts and public record.
“The Government of Pakistan has a Tax Treaty with Switzerland and as per Article 25 of the said Treaty, information may be obtained from its government on case to case basis. However, Switzerland is not bound to provide information which is in possession of their banks and financial institutions, covered under their bank secrecy laws. Feeling the need for developing instruments for better access to information, FBR on 11th October, 2012 requested the then finance minister for approval to renegotiate the existing Tax Treaty.
“However, the required approval was not granted. On assumption of office by me as finance minister, I restarted the process, obtained Cabinet approval and the formalities for renegotiating the Treaty were completed. Thereafter, negotiations were started by FBR to revise the existing Treaty in August 2014. First round of negotiations has been completed and currently FBR’s request for 2nd round is pending with Swiss authorities. As and when our proposed amendments are agreed to by the two countries, Switzerland will be obliged to provide information about banks and financial institutions irrespective of banks’ secrecy laws on case-to-case basis. You may also like to know that our government is also pursuing full membership of “Global Forum on Transparency and Exchange of Information” for tax purposes. Due to our active participation in the process, we were able to complete 1st phase of Peer Review in October, 2014 and the 2nd phase will start in July-August, 2015. After completion of this process Pakistan would be eligible for full membership leading to Automatic Exchange of and Access to Information from more than 121 countries across the globe.
