Prime Minister Shehbaz Sharif on Monday directed the immediate establishment of a special committee to impose stricter controls on the Federal Board of Revenue’s (FBR) proposed authority to arrest tax defaulters. He emphasized that “the harassment of regular taxpayers will never be tolerated.” Prime Minister Sharif instructed the FBR to address the concerns regarding the bureau’s power to apprehend tax defaulters. A special committee was formed and tasked with the responsibility of building consensus among all parliamentary parties.
Key Deliberations from the Meeting:
- Restricted Arrest Authority: Arrests are to be applied solely to “unusually large” tax defaulters, not ordinary businesses.
- Checks and Balances: A three-member board must approve every arrest; suspects are required to appear before a magistrate within 24 hours.
- Financial Thresholds: No arrests for alleged tax fraud below Rs50 million; investigations against such individuals may proceed without detention.
- Due Process: Arrests are permissible only after three ignored notices, a demonstrated risk of evidence tampering, or credible concerns of flight.
- Finance Bill Amendments: Safeguard clauses are to be incorporated into the 2025-26 Finance Bill following consultations with all coalition parties.
Protecting the Dignity of the Business Community
Addressing the review meeting – which included the finance and law ministers, as well as FBR Chairman Amjad Zubair Tiwana – Prime Minister Shehbaz stated that the proposed arrest clause in the Finance Bill 2025-26 “must never become a tool to intimidate Pakistan’s business community or investors.” He cautioned, “The honor and respect of our traders are in our hands. Arrest powers should target only major tax evaders, not compliant taxpayers.”
The finance minister, law minister, and FBR chairman briefed the Prime Minister that the authority to arrest sales tax defaulters has been enshrined in law since the 1990s. However, amendments are now being introduced to relevant provisions to enhance their coherence and alignment with the rulings of higher courts. Finance Minister Muhammad Aurangzeb assured the premier that the government is committed to fostering a “tax-fair, business-friendly” environment, adding that any revised legislation will “reflect global best practices and uphold taxpayer rights.”
