In a discussion hosted by the Pakistan Institute of International Affairs (PIIA), it was revealed that approximately $150 billion in assets belonging to Pakistani citizens is held abroad, including properties and other assets. Out of this amount, an estimated $100 billion lacks a clear money trail, indicating undisclosed sources of funds.
The session, titled “Offshore Assets of Pakistani Citizens,” featured insights from chartered accountant and former Federal Board of Revenue chairman Syed Shabbar Zaidi, along with Zafar Shafiq, a member of the PIIA council. Dr. Masuma Hasan, PIIA chairperson, highlighted that the discussion stemmed from Shabbar Zaidi’s book on Panama Leaks — Offshore Assets of Pakistani Citizens.
Shabbar Zaidi presented his findings, noting that the official summary by Pakistan’s finance minister indicated Pakistani citizens possess over $200 billion in assets abroad. However, Zaidi suggested this figure might be overstated, estimating the actual amount at around $150 billion, nearly equivalent to Pakistan’s foreign debt.
He highlighted that a significant portion, approximately $30-40 billion, represents foreign income earned by offshore Pakistani citizens, which is not subject to Pakistan’s tax laws. The remaining $100 billion, according to Zaidi, is associated with Pakistan but lacks proper documentation of its sources.
Zaidi explained that these assets include properties in the UK, USA, Europe, and Dubai (post-2000), portfolio investments in foreign banks, and shares in Pakistani companies held through offshore trusts. Each category amounts to approximately $33 billion. The non-declaration of these assets has implications, as it discourages the next generation from residing in Pakistan.
To address this issue, Pakistan introduced the Protection of Economic Reform Act, 1992, allowing amnesty for assets and funds remitted out of the country between 1992 and 2018, a period with relaxed foreign exchange regulations. However, challenges arose in 2022 when the government proposed a wealth tax on these assets.
Zaidi emphasized the need for Pakistan to build confidence among its citizens to encourage them to repatriate their assets, lamenting that few choose to retain their wealth within the country. He underscored the interconnection between Pakistan’s economic history and its foreign assets, characterizing Pakistan as an unfortunate nation influenced negatively by its own citizens.
In his presentation, Zafar Shafiq acknowledged the global practice of holding wealth abroad, highlighting concerns about tax evasion, money laundering, and financial transparency. He noted that governments and international bodies continuously refine regulations to ensure such activities comply with legal standards, thereby promoting global financial stability.
Shafiq pointed out that countries like Pakistan, India, and Bangladesh periodically introduce amnesty and tax whitening schemes to encourage the declaration of undisclosed income and assets. These initiatives aim to integrate hidden wealth into the formal economy, boost tax revenues, and enhance financial transparency, though they often spark ethical and economic debates.
He concluded by advocating for addressing the root causes prompting investors to retain wealth abroad, suggesting that creating an environment conducive to wealth retention and repatriation would support national economic development. In summary, the discussion highlighted Pakistan’s challenge with significant offshore assets lacking proper documentation of their sources, prompting calls for regulatory clarity and initiatives to foster domestic confidence in retaining wealth within the country.
