ISLAMABAD – The government has rolled back the Federal Board of Revenue’s (FBR) controversial arrest powers by introducing a new condition: approval from two business community representatives must be obtained before action is taken in sales tax fraud cases.
This move is part of a broader agreement between the government and traders to ease tensions after strong pushback over FBR’s new enforcement powers introduced in the federal budget.
Under the Sales Tax General Order issued this week, the FBR commissioner must first complete an inquiry into suspected fraud and then consult with two notified business representatives before even requesting permission for arrest from the Member Inland Revenue Operations.
In effect, this multi-step approval process makes it extremely difficult — if not impossible — for the FBR to carry out arrests, raising questions about the government’s commitment to tax enforcement.
These changes come after the Pakistan Peoples’ Party (PPP) expressed reservations about FBR’s unchecked authority, comparing it to that of the National Accountability Bureau (NAB). The party eventually agreed to support the law only after these safeguards were added.
The FBR has now also reversed its stance on several enforcement clauses:
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Ban on major purchases by non-filers (cars, houses, plots) has been put on hold.
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Penalties for large cash transactions over Rs200,000 have been softened.
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Cash payments into sellers’ bank accounts will now count as valid banking transactions.
Tax officials, in a recent briefing to PM Shehbaz Sharif, admitted that these changes undermine the FBR’s enforcement efforts and weaken the government’s broader tax reform drive.
The selection of business representatives for consultations will be done regionally. Trade organisations like FPCCI, APTMA, ICCI, KCCI, and others have been asked to nominate compliant, high-contributing taxpayers, from which the FBR will appoint two per region.
Despite salaried individuals contributing over Rs555 billion in taxes last year, traders remain under-scrutinised — a reality that continues to spark criticism over unequal tax burdens in Pakistan.
Experts say these latest retreats highlight the government’s continued leniency towards the trader class, undermining its earlier rhetoric about cracking down on tax evasion and broadening the tax net.