Pakistan limits tax officials’ arrest powers in move to curb misuse

Pakistan has moved to curtail the arrest powers of tax officials under a new provision in the proposed Finance Bill, requiring prior approval from the Commissioner of Inland Revenue (CIR) before any detention is made in cases of suspected tax fraud.

According to a statement issued by the Federal Board of Revenue (FBR), tax officers will only be able to exercise arrest powers -- similar to those under the Code of Criminal Procedure, 1898 -- after an inquiry has been conducted and the CIR authorizes further action based on its findings.

The amendment stipulates that if evidence of tax fraud is found, the investigation officer must obtain the CIR’s formal approval before proceeding with any arrest. It builds upon the existing framework under Section 37A of the Sales Tax Act, 1990, which already outlines procedures for arrest, including mandatory presentation of the accused before a special judge within 24 hours.

A new safeguard has also been introduced: if an arrest is found to be malicious, the case will be referred to the Chief Commissioner for further investigation.

Previously, an Assistant Commissioner of Inland Revenue could authorize arrests directly. The revised rules now require a formal inquiry and higher-level authorization to improve accountability and curb potential misuse of power.

FBR Chairman Rashid Mahmood Langrial said the agency is open to strengthening oversight further, including proposals to require consent from multiple senior officers before approving an arrest.

To prevent undue harassment of law-abiding taxpayers, Prime Minister Shehbaz Sharif has constituted a high-level committee to review the proposed changes. The panel is led by the finance minister and includes the ministers for law, economic affairs, and state finance, as well as the Special Assistant to the PM on Industries and the FBR chairman.

The committee has been tasked with evaluating safeguards to prevent abuse of authority and ensuring that legal business activities remain unaffected. It is expected to submit its recommendations to the prime minister within three days.

Officials say the proposed changes are intended to reassure taxpayers that the state will crack down firmly on tax fraud, while simultaneously protecting compliant businesses from arbitrary enforcement.