FBR reportedly required to consult traders before arresting tax fraud suspects

ISLAMABAD: The Federal Board of Revenue (FBR) will now reportedly consult at least two business community representatives before proceeding with arrests in alleged sales tax fraud cases.

According to The Express Tribune, the decision follows growing pressure from traders and appears to significantly weaken the FBR’s newly acquired powers to detain suspects.

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The change has been formalised through a Sales Tax General Order, which outlines a multi-step process for investigations and arrests. According to the order, the FBR cannot begin an inquiry unless it is approved by a commissioner.

Even after an inquiry is completed, the commissioner must first consult with two business representatives, nominated by trade bodies and shortlisted by the FBR, before seeking approval from the Member Inland Revenue Operations to proceed further.

The list of eligible trade bodies includes major chambers and associations such as the Federation of Pakistan Chambers of Commerce and Industry, Lahore Chamber, Karachi Chamber, and the All Pakistan Textile Mills Association.

These groups are required to nominate members who are active, compliant taxpayers, from which the FBR will select regional representatives.

The detailed approval process has raised concerns about its impact on enforcement. Tax officials say it will now be extremely difficult to detain anyone accused of tax fraud, even in clear-cut cases.

This move comes just weeks after the government, through the budget, granted the FBR wide-ranging powers to arrest defaulters, penalise undocumented cash transactions over Rs200,000, and restrict major purchases like cars and property by non-filers.

However, in the face of resistance from the Pakistan Peoples Party and the business community, many of these measures have been rolled back through successive notifications.

Sources told The Express Tribune that FBR officials recently informed Prime Minister Shehbaz Sharif that the compromises have dealt a blow to their enforcement plans. Meanwhile, the salaried class, already contributing Rs555 billion in taxes, continues to shoulder the burden, while there remains little transparency about what traders pay.

The FBR appears to have effectively been taken back to square one, raising questions about the government’s commitment to broadening the tax base.