• Lawmakers warn misuse to hurt businesses, turn country into police state
• FBR chief says tampered vehicles to be seized and destroyed
• IMF to review tax authority’s performance every week
• Average annual income of top 1pc households is Rs10m
ISLAMABAD: A parliamentary panel on Saturday pressed senior tax officials to drop proposed provisions in the Finance Bill 2025 granting arrest and money laundering notice powers to tax commissioners, warning the move would create unnecessary obstacles for businesses.
The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, convened for a second consecutive day to examine the Finance Bill 2025. Lawmakers debated the implications of enhanced powers for the Federal Board of Revenue (FBR) and discussed measures to curb tampered vehicles.
Senator Mandviwalla warned that there is a grave risk of misuse of the power to arrest or issue a notice. Even a junior FBR officer sending a notice could create chaos, he warned. He also emphasised that receiving a money laundering notice often leads to business shutdowns. “Such notices should require the express permission of the FBR chairman and the finance minister,” he said.
Senator Shibli Faraz also stressed that this extension of power to tax commissioners is turning Pakistan into a police state. “Even taxpayers will flee,” he warned.
Senator Farooq H. Naek underscored the impact of business because of the same, stating that money laundering notices are not trivial. “They can cripple a businessman’s ability to import or export,” Mr Naek warned the FBR.
Finance Minister Muhammad Aurangzeb acknowledged the apprehensions of senators, stating that money laundering notices are indeed a very serious matter and should be reviewed carefully under this provision.
The Pakistan Business Council has also raised alarm, formally writing to the prime minister to urge the government to reconsider the plan to empower FBR officials with arrest and notice authority.
Meanwhile, FBR Chairman Rashid Mahmood Langrial defended the move, stressing that tax officials already possess the authority to arrest businesspersons, but the procedure has been further refined in the latest bill.
However, Senator Shibli Faraz strongly opposed the proposal to grant arrest powers to income tax commissioners, arguing that such measures are turning the country into a police state.
Amendments to the Customs Act
The committee also examined proposed amendments to the Customs Act, 1969, including the rollout of a digital Cargo Tracking System (CTS) to monitor the movement of imports, exports, transhipments and transit cargo. The CTS aims to curb smuggling and ensure duty compliance while easing legitimate trade.
Another amendment would exempt postal or courier imports valued below Rs5,000 from duties and taxes. However, the de minimis limit for courier parcels is set to drop from Rs15,000 to Rs500 to prevent misuse by individuals.
The committee also approved strict measures against tampered vehicles. Under the proposed law, any vehicle found with a tampered chassis number, cut-and-weld modifications or re-stamped identification will be presumed smuggled, regardless of registration status.
The FBR chairman clarified that such vehicles will be confiscated and destroyed. “Such vehicles will not be auctioned again. In principle, these vehicles should be scrapped to prevent the resale of parts,” he said.
The committee recommended that the confiscation and destruction of such vehicles must occur within 30 days of seizure.
The Pakistan Poultry Association requested that customs duty on grandparent chicks be reduced to zero, while the Sindh Chamber of Agriculture sought a cut in duty on imported and reconditioned tractors from 15 to 5 per cent.
FBR chief briefing
Briefing the committee, Mr Langrial highlighted Pakistan’s stark wealth inequality, stating that just 5pc of the population controls most of the country’s wealth.
“Ninety-five per cent cannot afford to pay taxes,” he added, revealing that the top one per cent earn an average of Rs10 million per year.
The focus must shift from expanding the tax net to taxing the rich effectively, he emphasised. He added that only 6m people are registered tax filers, while 132m are under 18 or senior citizens — outside the labour force. At the same time, 67m are unemployed, including a large segment of educated women.
Mr Langrial confirmed that the International Monetary Fund (IMF) has asked Pakistan to introduce new tax measures worth Rs701 billion for FY26. The FBR aims to generate Rs500bn through enforcement measures, although the Fund has adjusted this target to Rs389bn.
He said that tax collection from the sugar, cotton, and other sectors is being underreported. In the tobacco sector, strict monitoring will start from July 1 to track green tobacco leaf production, he said, adding, “We will fix cameras at identified places.”
The IMF will also conduct weekly reviews of the FBR’s performance. Mr Langrial claimed that improved enforcement had already led to significant tax collection gains.
Published in Dawn, June 15th, 2025
