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Business Recorder

LCCI rejects 37AA, describes it as ‘black law'

LAHORE: The Lahore Chamber of Commerce and Industry, trade and industrial associations, at a press conference at LCCI, have rejected 37AA and called it a 'black law' that would severely damage the business climate in Pakistan. LCCI President Mian Abuzar Shad, Vice President Shahid Nazir Chaudhry, former Presidents Mian Anjum Nisar, Muhammad Ali Mian, representatives of various trade and industrial associations spoke on the occasion. LCCI President Mian Abuzar Shad said that Clause 37AA empowers tax authorities to arrest any taxpayer merely on suspicion of tax fraud, even without concrete evidence. This clause is nothing less than a sword hanging over the heads of the entire business community. He said that prior to this clause the definition of tax fraud had already been broadened extensively, encompassing a wide range of actions, from minor accounting mistakes to misinterpretation of law. The new clause now grants excessive and unchecked powers to FBR officers, enabling harassment and potential abuse. The LCCI President said that business community has unanimously rejected this clause and are calling for its complete withdrawal. Such sweeping powers not only violate basic principles of justice but also infringe upon the constitutional rights of taxpayers. It will scare off investors and damage the trust that businesses have in the system. Mian Abuzar Shad said that reputations of the businesses are at stake and arresting company officers, especially on mere suspicion, would bring serious disrepute and operational disruptions to large enterprises. He said that following country-wide backlash, the government made a minor amendment to Section 37AA saying that arrest can only occur if there is a tax loss exceeding Rs50 million and upon the approval of a three-member committee. However, LCCI firmly rejected this amendment as well. 'Even with the amendment, the law remains draconian. The fact that arrest powers can be exercised without concrete evidence or judicial oversight is unacceptable,' Mian Abuzar Shad added. LCCI Vice President Shahid Nazir Chaudhry said we have always advocated for business-friendly policies. But laws like Section 37AA will only create new challenges for an already struggling economy. Entrepreneurs will be discouraged and investment will decline further. Former Presidents Mian Anjum Nisar and Muhammad Ali Mian urged the government to immediately withdraw Clause 37AA saying that unless business leaders are given breathing space, Pakistan will not be able to achieve the ambitious economic goals outlined in the budget. They said that the government has set a GDP growth target of 4.2% and an export target of $35.3 billion but laws like these will make such goals impossible to achieve,' they warned. All the representatives of trade and industrial associations unanimously and forcefully reject Section 37AA. The participants of the Press Conference said that we are not criminals. We are the backbone of the economy. This clause must be rolled back immediately so that we can focus on reviving Pakistan's economy instead of defending ourselves against unjust and arbitrary harassment.' They said that the LCCI's powerful stand reflects growing unrest in Pakistan's business circles over heavy-handed and impractical taxation policies. If the government truly wants economic revival, it must abandon such oppressive clauses and create a trust-based tax environment. Copyright Business Recorder, 2025