EPBD's BoG rejects granting FBR excessive powers

Business Recorder

14 hours ago

ISLAMABAD: The Economic Policy and Business Development (EPBD) Board of Governors categorically rejected the draconian amendments introduced in the Budget that grant the Federal Board of Revenue (FBR) unprecedented and excessive powers over the business community.
These measures represent a fundamental assault on business rights and economic freedom that no business organisation can tolerate. It also goes fundamentally against the government's policy of promoting Ease of Doing Business in Pakistan, the board observed.
The budget transforms the FBR into an enforcement agency, with powers that threaten the foundation of Pakistan's business environment. Under the Anti-Money Laundering Act, 2010, FBR's Directorate General of Intelligence and Risk Management-Customs now operates with police-like authority, treating every businessman as a potential criminal rather than a contributor to the national economy.
The mandatory e-bilty system under Section 83C imposes comprehensive digital surveillance on all business transactions. With penalties reaching Rs1 million, goods confiscation, and six-month imprisonment for non-compliance, this system creates a climate of fear that will cripple legitimate business operations.
Most alarmingly, the Finance Bill 2025 grants FBR officers dangerous and excessive powers that have no place in a modern democracy:
Section 37AA authorises arrest without warrant based on mere suspicion of tax fraud—a power that invites abuse and harassment;
Section 14AE allows arbitrary seizure of business premises and property without adequate safeguards;
Section 37B permits 14-day detention of businesspersons, extendable through magistrates;
Section 11E enables tax assessment and recovery based on suspicion alone, without proper investigation;
Section 33 (13 and 13A) introduces 10-year prison terms and Rs10 million fines for broadly defined "tax fraud" that could criminalise routine business errors;
Section 32B empowers private auditors with quasi-legal authority over businesses.
These provisions create a surveillance state where businesses operate under the constant threat of arbitrary action.
This is not tax policy—this is systematic harassment institutionalised by law.
While burdening businesses with these oppressive measures, the budget offers absolutely zero incentives for industrial growth or investment.
With interest rates at 11 per cent - the highest in the region - businesses are already fighting for survival. Industrial closures, flight of capital, and unprecedented unemployment. This demands urgent relief to the business community, not additional persecution.
The effective tax burden on Pakistani businesses has reached a breaking point. Corporate income tax at 25 per cent, combined with 25 per cent dividend tax, creates a 50 per cent burden before accounting for super tax, minimum turnover tax, withholding taxes, sales tax, and import duties. The total effective tax rate of 50-60 per cent makes Pakistan one of the most punitive business environments regionally, driving away investment and destroying job creation.
The EPBT also expressed its resolve that with the inflations having been brought down to 4.5 per cent, the policy rate must not exceed six per cent. This will not only make the struggling businesses viable, but also create enough fiscal space to double the vital expenditures, as compared to last year on education and health, rather than reducing them, as has been proposed in this budget. The government is advised to use the monetary policy as a tool to kick-start the economy and not to throttle it.
The EPBD issues ultimatum: If these provisions remain in the Finance Bill 2025, the business community will, unfortunately, have no choice but to cease operations in Pakistan. It is not difficult to appreciate that the tax-paying business community will find it difficult to participate in an economy that criminalises business activity and treats entrepreneurs as suspects.
Pakistan's economy cannot survive without its business community. The proposed policy measures will make it impossible for law abiding businesses to survive in Pakistan. If the government believes it can collect taxes without taxpayers, it can try. If FBR thinks it can run the economy without businesses, let them do so.
The EPBT demanded immediate actions by the government including; complete withdrawal of all arbitrary enforcement powers granted to FBR, reduction of interest rates to six per cent to provide relief to struggling businesses, elimination of the punitive tax structure that penalises compliant businesses, introduction of genuine pro-business policies that encourage investment and growth.
Copyright Business Recorder, 2025