PM forms committee to control FBR arrest powers for tax defaulters

Prime Minister Shehbaz Sharif on Monday directed the immediate formation of a special committee to tighten controls on the Federal Board of Revenue’s (FBR) proposed power to arrest tax defaulters, insisting that “harassment of regular taxpayers will never be tolerated.”

Prime Minister Sharif ordered the FBR to remove the reservations on the bureau's power to arrest tax defaulters. A special committee was formed and entrusted with the responsibility of taking all parliamentary parties into confidence.

Key points from meeting

Directive	Details
Limit arrest powers	Arrests to apply only to “unusually large” tax defaulters, not ordinary businesses.
Checks & balances	A three‑member board must approve every arrest; suspects must appear before a magistrate within 24 hours.
Financial thresholds	No arrests for alleged tax fraud below Rs50 million; investigations against such persons may proceed without detention.
Due process	Arrests allowed only after three ignored notices, evidence‑tampering risk, or flight‑risk concerns.
Finance Bill amendments	Safeguard clauses to be written into the 2025‑26 Finance Bill after consultation with all coalition parties.

‘Honour of business community at stake’

Addressing the review meeting -- attended by the finance and law ministers as well as FBR Chairman Amjad Zubair Tiwana -- Prime Minister Shehbaz said the proposed arrest clause in the Finance Bill 2025-26 “must never become a tool to intimidate Pakistan’s business community or investors.”

The honour and respect of our traders are in our hands,” he cautioned. “Arrest powers should target only major tax evaders, not compliant taxpayers.” 

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The finance minister, law minister, and FBR chairman briefed the PM that the authority to arrest sales tax defaulters had existed in the law since the 1990s. However, amendments are now being made to relevant provisions to make them more coherent and aligned with the rulings of higher courts.

Finance Minister Muhammad Aurangzeb assured the premier that the government is committed to a “tax‑fair, business‑friendly” environment, adding that any revised law will “reflect global best practices and uphold taxpayer rights.”