Govt moves bill to validate FBR appointments, scrap policy board powers in major overhaul

The government has tabled amendments in Parliament to validate past appointments of Federal Board of Revenue (FBR) members, provide legal cover to previously granted incentives, and restructure the tax body’s governance framework by abolishing its policy board, The Express Tribune reported. 

The proposed changes to the FBR Act, 2007 were introduced in the Senate last week and have been referred to the Senate Standing Committee on Finance for consideration. The amendments seek to address legal vulnerabilities arising after the Supreme Court’s 2016 judgment in the Mustafa Impex case, which clarified that the authority of the federal government can only be exercised through the federal cabinet.

Under the existing law, FBR members are required to be appointed by the federal government. However, the bill’s statement of objects and reasons acknowledges that, in practice, such appointments were made by the FBR chairman or the Secretary Revenue Division. As a result, appointments made since 2016, including those of current members, are considered legally questionable.

To resolve this, the government has proposed that all appointments made before the commencement of the FBR Amendment Act 2026 be deemed valid retrospectively. The bill also seeks to validate all decisions, orders, notifications, agreements and other actions taken by the board, chairman or members appointed during this period.

For future appointments, the federal cabinet has temporarily delegated its authority to the Secretary Revenue Division, a grade 22 officer, to appoint members in grades 21 and 22. The amendment proposes permanently transferring this power from the cabinet to the Secretary Revenue Division.

The legislation further seeks to grant retrospective legal cover to rewards and incentives issued to FBR employees and individuals assisting in preventing tax evasion since 2011. Currently, such payments require approval from the FBR policy board. The proposed amendment removes this requirement and states that the authority shall be deemed to have always rested with the FBR.

In addition, the government has proposed abolishing the FBR policy board, which is headed by the finance minister and includes federal ministers and parliamentary representatives. Its functions would be replaced by a tax policy office led by a senior civil servant, eliminating cabinet and parliamentary representation in key policy decisions.

The standing committee is expected to deliberate on the bill this week, as the government moves to regularise past actions and revise the institutional structure of the country’s tax administration.