Finance Minister Ishaq Dar on Wednesday told the National Assembly that Pakistan will sign an agreement with Switzerland on exchange of information regarding bank accounts on March 21.
"The Swiss government offered to sign such an agreement with Pakistan in the third quarter of the current month that will enable us to exchange information on tax-evaded money," Dar said in a policy statement.
The finance minister said that several media reports have surfaced over the years alleging that Pakistanis have evaded taxes ─ a hefty amount of over $180-200 billion ─ and stored the money in Swiss banks.
The situation demanded that Pakistan approach the Swiss government for a treaty surrounding the exchange of information, Dar added.
The minister said that the process to draft the agreement began in 2013 when he suggested the Finance Ministry revisit the 2005 treaty on avoidance of double taxation, particularly the clause regarding minimum exchange of information with respect to income tax.
Dar said he had proposed that the federal cabinet allow the Finance Ministry to enter into a new agreement with Swiss authorities.
The finance minister said that the Swiss government had initially proposed "strict conditions" to be included in the agreement, such as reducing tax rates, granting it most-favoured nation (MFN) status, and reducing students' bank account limit to $14,500 from the existing $18,000.
However, Dar said, Pakistan continued to discuss the matter with Swiss authorities and advised them to alter their conditions, as fleeing with money laundered via tax evasion had become a common practice by certain people.
"Therefore after an understanding that now Pakistan will automatically get this information, they have also offered us a new agreement and I shall be going there to sign this agreement on March 21 this year," he said.
In September 2016, Pakistan became the 104th member of Organisation of Economic Cooperation and Development (OECD), a global forum on an exchange of tax information of offshore accounts and investments.
Signing the OECD Convention on Mutual Administrative Assistance in Tax Matters paved the way for Pakistan to enter into exchange of information regarding offshore accounts. The need for signing the law was felt in the wake of Panama Papers case.