The government has reported over Rs2.2 trillion in tax evasion from “fake” and “flying” invoices over the past two fiscal years, underscoring significant losses due to inadequate enforcement.
According to a report published by Dawn, Federal Board of Revenue (FBR) Member Hamid Atique Sarwar testified before the Senate Standing Committee on Finance and Revenue, revealing that Rs873 billion worth of fraudulent invoices were discovered last year, adding to the Rs1.37 trillion uncovered in the previous year. This brings the total loss due to such practices to Rs2.25 trillion over two years.
Sarwar stated that this amount represented nearly one-third of the total customs tax collected, emphasising the need for stricter measures to address the ongoing issue. He also noted that the FBR had taken action against tax officials misusing their powers, claiming that no other department had taken similar actions against its own staff.
Addressing the ongoing concerns from the business community about tax laws under the Finance Bill 2025-26, Sarwar reassured that the law allows for arrests if tax evasion is suspected, but the Finance Bill includes multiple safeguards to prevent harassment of businesses.
The committee held a detailed discussion on anomalies in the 2025-26 Budget, particularly regarding the FBR’s power to arrest individuals based solely on suspicion. State Minister for Finance and Revenue Bilal Azhar Kiyani said that the Prime Minister had formed a committee to address the grievances of the chambers of commerce. A circular would be issued soon to address issues raised by the business community.
Senator Saleem Mandviwalla, who chaired the meeting, agreed with Kiyani that amendments to the Finance Bill should not be sought just a month after its passage, especially with IMF consent.Â
Dr. Najeeb from FBR acknowledged that amendments to the bill had been made after significant deliberations, which had led to some misunderstandings.
The committee also recommended that the State Bank of Pakistan provide a detailed breakdown of freelancers’ contributions to software exports over the past 15 years, and suggested the removal of periodical and journal subscriptions from the IT services list.
