Islamabad, June 16, 2025 – Prime Minister Muhammad Shehbaz Sharif has issued clear instructions to limit the arrest powers of the Federal Board of Revenue (FBR), particularly in cases that could lead to harassment of legitimate taxpayers and the business community.
His directive came during a high-level review meeting at the Prime Minister’s Office, in response to widespread concerns raised in the media regarding the FBR’s arrest provisions in the Finance Bill 2025.
Prime Minister Shehbaz emphasized that while legal action against tax evaders is necessary, the FBR must exercise its powers responsibly. “The dignity and trust of Pakistan’s business community are non-negotiable. No one should feel intimidated by the use of state powers under the pretext of tax enforcement,” Shehbaz said.
The premier noted that the arrest powers under existing tax laws, particularly regarding sales tax defaulters, have been in place since the 1990s. However, he pointed out that recent judicial interpretations have necessitated a revision of these powers to ensure alignment with constitutional safeguards and public expectations.
Shehbaz directed that a special committee be constituted to review the scope of FBR’s arrest powers and recommend measures to prevent misuse. This committee will also study the proposed legal amendments and suggest appropriate safeguards to ensure that only cases involving deliberate and large-scale tax evasion are subjected to arrest provisions.
Furthermore, the prime minister stressed that these powers should not be used arbitrarily and must include an effective mechanism of external oversight. A system of checks and balances, including third-party evaluations, will be introduced to monitor the implementation of arrest clauses within tax laws.
Shehbaz instructed that the Finance Act 2025 must include explicit provisions to protect taxpayers against any potential misuse of FBR’s enforcement powers. He also called for broad consultation with allied political parties in parliament to achieve consensus on this critical issue.
The meeting was attended by key federal ministers, including those for Defence, Law, Commerce, Economic Affairs, and Information, along with the Chairman FBR and senior economic advisers. The move underscores Shehbaz’s commitment to maintaining investor confidence and ensuring that the FBR’s powers are balanced, transparent, and fair.