ISLAMABAD: The federal government is reconsidering the wide-ranging powers granted to the Federal Board of Revenue (FBR) to arrest suspected tax evaders, amid growing concern over the potential for abuse.
Prime Minister Shehbaz Sharif has formed a high-level committee to review the contentious provisions included in the Finance Bill 2025-26.
The committee is tasked with proposing strong safeguards to prevent arbitrary arrests by tax officials.
The move comes after significant pushback from business leaders and members of parliament over the new arrest powers.
Critics argue these measures could lead to harassment and undermine taxpayer trust in the FBR.
In response, FBR Chairman Mahmood Langrial clarified that any arrest under the proposed Section 37AA of the
Sales Tax Act, 1990, would require prior approval from a commissioner.
He also suggested the government may further tighten the process by requiring sign-off from three senior officers instead of just one.
Business Community Demands Safeguards
The business sector has raised alarms over the proposed powers.
Pakistan Business Council CEO Ehsan Malik labeled the move as “draconian” in a letter to Finance Minister Muhammad Aurangzeb.
He warned that it would likely be used to “harass” compliant taxpayers.
FBR officials maintain that arrests will only be made in specific cases.
These include when a tax defaulter ignores three summons, attempts to destroy evidence, or is at risk of fleeing the country.
Langrial emphasized that the powers will be limited to serious violations and that procedural checks will be introduced.
He further noted that while the authority to arrest exists in current law, the new bill aims to streamline the process in line with recent court rulings.
Parliamentary Oversight Intensifies
Prime Minister Shehbaz has ordered that any misuse of arrest powers must be prevented through strict oversight.
He instructed officials to develop an external review system and ensure that arrests occur only in cases of high-value tax fraud.
In a recent meeting, the National Assembly Standing Committee on Finance expressed concern over the proposed amendments.
Finance Minister Aurangzeb reassured the committee that the issue would be revisited.
He acknowledged Senator Farooq H. Naik’s suggestions for more robust safeguards and called them “highly appropriate.”
The government is now consulting coalition partners before finalizing the provisions in the Finance Act.
The prime minister has also directed that protections against misuse be explicitly included in the new legislation.
