FBR chief defends arrest powers citing over Rs1.61tr tax evasion

• Country's workforce stands at 67 million: FBR chief
• Langrial says top 1% household evade Rs1,233bn taxes.
• Top 5% evade Rs1,611bn; remaining 95% elude Rs140bn.
  

ISLAMABAD: Amid government's efforts to increase the tax revenue, Federal Board of Revenue (FBR) Chairman Rashid Mahmoud Langrial has defended proposed powers for the tax body to arrest CEOs, CFOs, and Board of Directors on tax fraud arguing that the FBR assumed the Code of Criminal Procedure (CrPC) powers, The News reported on Sunday.

Speaking during a meeting of the Senate Standing Committee on Finance, Langrial backed the proposed changes in the Finance Bill and stated that there was no country in the world where tax officers were not allowed to make arrests for tax fraud.

Citing the example of India and Bangladesh which granted powers of arrest, the tax authority's chief said that the country's workforce stood at 67 million and revealed that the top 1% of households evaded Rs1,233 billion.

"The top 5% evaded Rs1,611 billion. The remaining 95% of the total workforce evaded just Rs140 billion," he highlighted.

The FBR chairman's remarks come against the backdrop of the Rs17.57 trillion budget for the Fiscal Year 2025-26 tabled by the government aiming for a 4.2% GDP growth target.

In his budget speech earlier this week, Federal Finance Minister Muhammad Aurangzeb outlaid FBR's tax collection target of Rs14,131 billion — representing an 18.7% increase from the current fiscal year.

Of this amount, Rs8,206 billion will be allocated to provinces as their constitutional share in federal taxes, he added.

On the non-tax revenue front, the government has set an ambitious target of Rs5,147 billion, reflecting efforts to optimise income from state-owned enterprises and other non-tax sources. After accounting for provincial transfers, the federal government's net revenue is estimated at Rs11,072 billion.

The total federal expenditure has been budgeted at Rs17,573 billion, with Rs8,207 billion earmarked for debt servicing — a critical component that underscores the government's commitment to fiscal responsibility.

Expanding on the revenue generation in the Senate committee, Langrial said that the tall wall of protectionism through tariffs resulted in efficiencies in the domestic market, so systematically unworthy and unqualified sons were made CEOs with the help of tariff protections. He asked the committee members to abolish import tariffs to make the economy competitive.

During the panel's session, the participants also continued deliberations to finalise recommendations for Finance Bill 2025-26, under the Senate committee recommended removing 18% GST on the import of solar panels, increasing minimum wages from Rs37,000 to Rs40,000.

Lawmakers oppose arrest powers

Senator Anusha Rahman from the ruling Pakistan Muslim League-Nawaz (PML-N) opposed the FBR’s power to arrest CEOs, CFOs and directors on the allegation of tax frauds and took the stance that the FBR removed CrPC and assumed such powers. She questioned how the FBR could arrest anyone on the basis of just intent of fraud.

Senator Farooq H Naek from the Pakistan Peoples Party (PPP) also opposed granting such drastic powers. Senator Shibli Faraz from Pakistan Tehreek-e-Insaf (PTI) said that the country turned into a police state and asked the FBR to withdraw giving powers to Commissioners of Inland Revenue (IR) and officers.

The committee asked the FBR to seize and destroy tampered vehicles on the recommendation of Senator Farooq H Naek.

The chairman of the Senate panel took up the issue that around 250 companies were issued notices under the Anti-Money Laundering (AML) law in the past so its issuance should be linked with the permission from the minister of finance and FBR chairman.

Finance czar Aurangzeb said the issuance of notices to the business community under the AML Act was a very serious matter and the government would review the AML powers to the FBR.

The issue came to light when FBR Member Customs (Policy) explained the creation of the proposed Directorate General of Intelligence and Risk Management Customs under the Finance Bill 2025-26. The proposed Directorate would have the powers to exercise under the AML Act.

FBR Member Customs explained that new section (187A-Presumption as to legal character of vehicle), where any vehicle is detained or seized under this Act or the rules made thereunder and such vehicle upon forensic examination is found to have a tampered chassis number or cut and weld chassis or chassis number filled with welding material or re-stamped or body changed, such vehicle shall be presumed to be smuggled, even if registered with any Motor Registration Authority, and shall be liable to confiscation, it added. 

Senator Rahman further raised the question of why the FBR was criminalising the tax matters and removing CrPC powers.