In poverty-stricken Pakistan, billions of dollars in dirty money is spirited abroad
An investigative report has revealed how Pakistan's politicians, officials, and military personnel own property worth $12.5 billion abroad.
The report – Dubai leaks, revealed that Pakistani nationals own a substantial number of properties in Dubai, collectively valued at a high amount of $12.5 billion.
The leaked data, accessed by an international consortium of journalists, sheds light on the ownership of between 17,000 to 22,000 properties in Dubai by Pakistani citizens, according to The Dawn publication.
Elsewhere, it is estimated that nearly US$15 billion was siphoned off outside the country to escape taxation, leaving one-third of the population to survive below the poverty line and millions of mothers and children remaining undernourished. Switzerland and London are other favourable havens for the rich, famous and Pakistan Generals to stash funds abroad.
Some of the beneficiaries named in the Dubai Leaks include President Asif Ali Zardari’s children, Hussain Nawaz Sharif, Interior Minister Mohsin Naqvi’s wife, late Gen Pervez Musharraf, and former Prime Minister Shaukat Aziz.
The massive illegal capital flight is despite Pakistan currently reeling under the most serious debt crisis in its history, with authorities begging for a bail out from lenders around the world. The Supreme Court of Pakistan has come under scrutiny for indifference to corruption and anti-national activity on the part of the ruling class.
The leaks have also highlighted certain loopholes in the property declarations by politicians; for instance, Interior Minister Mohsin Naqvi’s wife had not disclosed that he owned a villa in Dubai in his Senate election nomination papers during the February general elections.
The data is primarily from the years 2020 and 2022, and it offers a comprehensive overview of hundreds of thousands of properties in Dubai, including details about their ownership or usage.
The data reveals that Pakistani nationals are listed as owners of over 17,000 properties in Dubai up to the spring of 2022. However, academic assessments based on the data and additional sources suggest that the actual number of Pakistani property owners in Dubai could be as high as 22,000.
Estimates indicate that the combined value of these residential properties owned by Pakistanis surpassed US$10 billion at the beginning of 2022. With a notable increase of over 25% in property prices over the last two years, the current value of Pakistani-owned properties in Dubai is believed to exceed $12.5 billion.
Responding to these revelations, Malik Amjed Zubair Tiwana, chairman of the Federal Board of Revenue (FBR), emphasised the importance of ensuring that those eligible to pay taxes in Pakistan on rental income or capital value from these properties fulfil their obligations.
The issue of taxation on overseas assets, especially for Pakistani residents with properties abroad, has sparked discussions on potential tax liabilities and the need for enhanced transparency in tax compliance.
The leaked data underscores the significant contrast between the economic challenges faced by Pakistan and the substantial investments made by its known nationals in properties overseas.
The information was acquired by the Centre for Advanced Defence Studies (C4ADS), a Washington, D.C.-based non-profit organisation specialising in research on international crime and conflict.
Collaborating with Norwegian financial outlet E24 and the Organised Crime and Corruption Reporting Project (OCCRP), the leaked data was part of an investigative project named 'Dubai Unlocked', involving 74 partners from 58 countries.
In February 2018, a court in Pakistan began hearing a suo moto case, ‘Maintaining of Foreign Accounts by Pakistani Citizens Without Disclosing the Same/Paying Taxes,’ leading to the appointment of committees, and collection of expert advice, but no progress has been made since January 2019 when the last hearing was held.
The sole objective of the case was to retrieve the dirty money, and expose and punish the culprits. But, instead, successive governments have given out unprecedented immunities, amnesties and sureties through legal provisions to those who created this dirty money economy.
According to a 2010 study, ‘What is hidden, in the hidden economy of Pakistan? Size, causes, issues, and implications, almost 35 percent of Pakistan’s economy was informal and remained the most prolific part of the dirty money creation. A significant reason for this scourge was high denomination currency notes.
Notes of Rs.5000 denomination are used for hoarding, smuggling, currency scam and theft. The Rs.5,000 currency notes worth Rs.4.5 trillion are in circulation, with roughly Rs.2 trillion siphoned off in ‘safe deposits’ and used in money laundering, tax evasion, and smuggling.
This growing part of Pakistan’s economy, often called ‘The Secret Strength of Pakistan’s Economy,’ has bloomed during the current economic meltdown and the tax gap has now crossed over 200 percent.
The situation is likely to worsen this year, as debt servicing is expected to reach Rs.8.5 trillion against the budgeted figure of Rs.7.3 trillion. Such a crisis is unfolding at a time when the accumulated size of the informal (untaxed) economy is around Rs.1000 trillion.
Economists have estimated that if a flat rate of 10% were to be offered to all those who have failed to pay income tax in the past, the additional income tax collection could cross Rs.10 trillion in one year alone
