The Federal Board of Revenue (FBR) has issued new guidelines requiring tax officials to consult at least two representatives from the business community before proceeding with investigations that could lead to arrests in sales tax fraud cases.
According to reports, this move, which follows an understanding between the government and the business sector, is seen as significantly slowing down the process of detaining suspected individuals involved in tax fraud.
The FBR’s commissioner of inland revenue, under the Sales Tax General Order, cannot initiate an investigation without first obtaining approval from the member of inland revenue operations. However, before seeking this approval, the commissioner must convince the business community that fraud has occurred and that there are valid grounds for an arrest.
The order mandates that the commissioner consult with two representatives from the business community, selected from trade bodies that are notified by the board. This added layer of consultation has raised concerns that the FBR’s power to arrest may become effectively unusable, given the complex and time-consuming procedure.
The government had granted the FBR the authority to make arrests as part of its efforts to raise Rs389 billion through enforcement measures during the current fiscal year. These powers, which also included the ability to prohibit purchases of items like cars and homes, and penalize large cash expenses, were met with criticism, particularly from the Pakistan Peoples’ Party (PPP). After a compromise, the government inserted safeguards to address concerns raised by coalition partners in the National Assembly.
