Tax laws: PM directs formation of arrest powers review panel
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday directed the formation of a special committee to review the arrest powers granted under tax laws and the proposed amendments to them, stressing that the harassment of taxpayers will not be tolerated.
Chairing a high-level meeting to review matters related to the Federal Board of Revenue (FBR), the prime minister expressed concern over recent media reports highlighting arrests of tax defaulters.
He was briefed by officials who said that the authority to arrest individuals over tax matters has existed since the 1990s. However, amendments are now being proposed to align the law with rulings from superior courts.
Arrest for tax fraud: Senate panel for defining a threshold
The prime minister issued clear instructions that no legislative changes should be used to intimidate law-abiding taxpayers or members of the business community.
'Harassment of regular taxpayers will never be tolerated,' Sharif said. 'The honour and respect of the business community, investors, and taxpayers must be upheld.'
He directed that an effective external review mechanism and a system of checks and balances be established to monitor arrests made under tax laws. He emphasised that such powers should be limited strictly to cases involving exceptionally large-scale tax evasion.
Sharif also instructed that protective clauses against misuse of these powers be incorporated into the upcoming Finance Act. Additionally, he stressed that all proposed amendments must be discussed in consultation with coalition partners in parliament.
The meeting was attended by federal ministers for defence, law, commerce, economic affairs, information and broadcasting, the minister of state for railways, the FBR chairman, economic experts, and senior government officials.
It is pertinent to note that under provisions in the Finance Bill 2025-26, the FBR has empowered Inland Revenue officers to arrest senior company officials – such as CEOs, CFOs, and directors – suspected of tax fraud. These arrests can be made with prior approval from a Commissioner. However, in urgent cases, officers may proceed without prior approval, provided the action is immediately reported and justified.
Copyright Business Recorder, 2025
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