Key Points:
- Concerns raised over FBR’s power to arrest; officials say apprehensions are exaggerated
- Senate finance panel agrees it’s too soon to change Finance Bill just after approval
ISLAMABAD: The Federal Board of Revenue (FBR) informed the Senate Standing Committee on Finance and Revenue on Thursday that over Rs2.2 trillion in taxes were lost in the last two years due to bogus and unverifiable invoices.
FBR member Hamid Atique Sarwar revealed that Rs873 billion worth of fake or “flying” invoices were detected in the previous fiscal year, in addition to Rs1.37 trillion uncovered the year before, pushing the total to Rs2.25 trillion.
He explained this figure makes up nearly one-third of the total customs-side tax collection. He made this point while responding to business community demands for leniency in the Finance Bill 2025–26.
Sarwar emphasized that such large-scale losses couldn’t be ignored and added that FBR had taken internal action against officials who abused their authority. He claimed no other federal or provincial body had held its own employees accountable to this extent.
He clarified that the arrest powers granted under a 1996 law required reasonable suspicion from an assistant commissioner about tax evasion, record tampering, or suspects trying to flee the country. The new Finance Bill, he said, includes multiple safeguards to prevent unnecessary harassment of taxpayers.
During the session, representatives from chambers of commerce voiced their unease with the arrest provisions in the Finance Bill. Minister of State for Finance and Revenue, Bilal Azhar Kiyani, said a committee formed by the Prime Minister is currently working to address business community concerns.
He also mentioned that a redressal committee has been established for ongoing consultation with businesses and a circular would soon clarify the issues pointed out by the chambers.
Senator Saleem Mandviwalla, who led the meeting, and other senators agreed with Kiyani’s view that proposing changes to the Finance Bill so soon after its IMF-backed approval would reflect poorly.
Another FBR official, Dr. Najeeb, stated that taxpayer-related provisions were softened after feedback from coalition partners and lawmakers. He noted that the final Finance Bill passed by Parliament was significantly altered from the one initially introduced.
He admitted there wasn’t enough time left to consult anomaly committees due to lengthy discussions with standing committees of both Houses. That said, he maintained the “fear factor” around arrest powers was being exaggerated. Separately, during discussions on software export figures over the past 15 years, the committee directed the State Bank of Pakistan to submit clear data distinguishing freelancers’ contributions. It also recommended removing journal and subscription fees from the IT services tax list
