FPCCI rejects law allowing businessmen's arrest

Business Recorder

18-06-2025

LAHORE: The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has vehemently opposed the recently enacted law permitting the arrest of business community members, terming it entirely unacceptable.
FPCCI President Atif Ikram Sheikh, alongside Patron-in-Chief of the United Business Group (UBG) S.M. Tanveer, FPCCI Vice Presidents Zaki Aijaz and Tariq Jadoon, and other prominent business leaders, expressed their strong reservations during a press conference held at the FPCCI Regional Office in Lahore.
The business leaders announced their decision to halt all industrial operations and symbolically hand over factory keys to the government, challenging it to manage the industries itself. Criticizing the introduction of Section 37AA, they declared that if the government intended to arrest businessmen, they could no longer continue running their factories. While reaffirming their willingness to cooperate with the government, they emphasized that the business community has always supported national revenue objectives but would not tolerate any form of harassment.
The leaders reiterated their longstanding demand to reduce electricity tariffs to 9 cents per unit, pointing out that despite a decline in the Consumer Price Index (CPI), interest rates remain unjustifiably high. They also condemned the imposition of an 18% sales tax on solar energy solutions, labelling it an unreasonable measure. Additionally, they called for the immediate reinstatement of the Final Tax Regime (FTR) and the complete restoration of the Export Facilitation Scheme (EFS) in its original form.
FPCCI President Atif Ikram Sheikh stated, 'We are fighting for the rights of the business community. Until all policy anomalies are resolved, we stand in full solidarity with all trade bodies.' He further revealed that a meeting with the Prime Minister of Pakistan would soon be arranged to seek resolution on these critical issues. The business community has given the government a seven-day ultimatum to address their concerns.
To formalize negotiations, an eight-member committee has been formed under the leadership of FPCCI President Atif Ikram Sheikh. The committee includes FPCCI Vice President Zaki Aijaz, former FPCCI President Zubair Tufail, Chairman of the FPCCI Policy Advisory Board Mian Zahid Hussain, Sialkot Chamber President Ikram-ul-Haq, former Faisalabad Chamber President Dr. Khurram Tariq, FPCCI Executive Committee Member Momin Ali Malik, and Khyber Pakhtunkhwa representative Fahad Ishaq. The committee will engage with the government to seek immediate redressal of the business community's grievances.
The FPCCI's strong stance underscores the growing frustration within Pakistan's business sector over policies perceived as detrimental to industrial growth and economic stability. The coming days will be crucial in determining whether the government and business leaders can reach a consensus to avert further disruptions.
Meanwhile, the FPCCI's Businessmen Panel (BMP) has said that the entire business community of Pakistan, including all major chambers of commerce and industry as well as trade associations across the country, has unanimously rejected the recently introduced Section 37AA of the Sales Tax Act, terming it a draconian and unconstitutional law that grants sweeping arrest powers to the Federal Board of Revenue (FBR).
BMP Chairman and FPCCI former president Mian Anjum Nisar said that businessmen strongly condemned the provision, warning that such an oppressive step has not been witnessed even during the colonial British era. Addressing a trade delegation of trade and industrial representatives here, he said that representatives from the Lahore Chamber of Commerce and Industry, Karachi Chamber, Islamabad Chamber, Rawalpindi Chamber, Faisalabad Chamber, Sialkot, Quetta, and Peshawar Chambers, along with numerous sectoral trade and industrial bodies, have called for the immediate withdrawal of Section 37AA. The entire private sector stands united in opposition, declaring that the FBR's move to criminalize business activities on mere suspicion of tax evasion is unacceptable and will not be tolerated.
He said that the Businessmen Panel (BMP), representing the country's largest and most credible platform of industrialists, exporters, and traders, has pledged to stand firm with all chambers and trade bodies in this cause. The BMP has warned that this issue will not fade away until the unjust law is removed and meaningful engagement begins. The government must decide whether it wants to build the economy with the private sector—or break it under the weight of fear and authoritarianism.
Anjum Nisar said that the business community fears that this new law, which gives tax officers' unchecked authority to arrest any businessman without court permission, based solely on suspicion, will cause irreparable harm to Pakistan's fragile economy while FBR has no good record in this regard. He argued that such laws destroy investor confidence, discourage industrial activity, and trigger capital flight at a time when the country is already facing serious economic challenges. He stressed that laws like Section 37AA violate the Constitution of Pakistan, particularly Article 10A, which ensures the right to a fair trial and due process.
He said businessmen from across Pakistan have questioned how arrests without proof or trial can be justified in a democratic society. The mere allegation of underreporting or a suspected tax shortfall should not be sufficient grounds for arresting businessman. Legal experts and constitutional scholars have echoed these concerns, pointing out that FBR officers are being handed police-like powers without any judicial oversight or accountability mechanisms, opening the door to potential abuse, corruption, and harassment.
The business community has demanded that tax collection and compliance remain a civil matter, not a criminal one. Turning tax disputes into criminal offenses sends a negative message to local and foreign investors, who are already hesitant to operate in Pakistan due to inconsistent policies and high costs of doing business. Entrepreneurs warn that such a hostile regulatory environment will drive many businesses into the undocumented economy, reduce tax collection instead of increasing it, and severely damage export potential and job creation.
Trade and industry bodies have also noted that this law will lead to a culture of fear and uncertainty in the market. Businesses are already struggling with rising electricity and gas tariffs, volatile exchange rates, excessive taxation, and declining demand. Adding the threat of arrest by tax authorities will only push more people out of formal business activity and erode trust between the government and the private sector.
He warned that FBR's earlier coercive actions, such as freezing accounts and sealing premises, were counterproductive. Now, granting arrest powers without trial has crossed all limits. He condemned the law as a dangerous attempt to control the business community through intimidation rather than policy reform. He also voiced strong objections, declaring it an anti-business and unconstitutional measure that would never be accepted.
Anjum Nisar demanded that the government take immediate notice of this matter and revoke Section 37AA. Instead of threatening legitimate taxpayers, the FBR should focus on broadening the tax base, simplifying tax procedures, and encouraging voluntary compliance through dialogue and reforms. Arrests and coercive measures have never delivered results in the past and will not work now. Sustainable tax collection can only be achieved through trust, transparency, and facilitation—not fear and force.
If this law is not withdrawn, the private sector has warned that it may resort to nationwide protests, shutter-down strikes, and legal action. The business community will not accept any law that treats entrepreneurs and job creators like criminals.
The collective voice of Pakistan's chambers and trade associations must not be ignored. Their message is clear: arrest powers have no place in tax enforcement, and the law must be repealed to restore sanity and balance in economic policymaking. The business community wants reform, not repression. They stand ready to cooperate with the government in tax compliance but will resist any attempt to criminalize entrepreneurship.
Copyright Business Recorder, 2025