THE amendments to the tax laws giving vast coercive powers to the FBR, and allowing it to circumvent existing laws and court judgements for immediate tax recovery will open a new Pandora’s box. With the promulgation of the Tax Laws (Amendment) Ordinance, 2025, the agency gets the powers to freeze bank accounts, attach movable and immovable properties and seal business premises to recover outstanding tax liabilities. Once a high court or the Supreme Court decides a tax-related matter against taxpayers, the FBR will be able to recover the due amount without prior notice. The revenue board is also empowered to depute tax officials at the manufacturing/ business premises to monitor the production, supply and stock of unsold goods. The changes have ostensibly been made to pre-empt businesses from hiding behind legal procedures and tedious court proceedings in order to delay or avoid the payment of the taxes due.

That the ordinance has drawn criticism from the trade bodies is not surprising. There are also indications that businesses will challenge these changes in court as these are seen as violative of Article 10A of the Constitution that guarantees the right to a fair trial and due process for all persons, both in civil and criminal matters. Besides, the ordinance also clips the authority of the courts by taking away their power to suspend the recovery, coercive or otherwise, of the taxes due at the time the verdict is passed to enable taxpayers to lodge an appeal in higher forums. In other words, the ordinance limits the remedies against the high-handedness of the FBR, undermining the safeguards provided in existing laws and by previous court judgements. The authorities believe that applying coercive tactics will help them improve enforcement and speed up the recovery of taxes worth billions of rupees stuck in the judiciary for the last several years. Their frustration with the inordinate delays in the settlement of tax matters by the courts is understandable. But is it desirable that they override the constitutional protections available to taxpayers, especially when stories of the cavalier tactics used by tax collectors to extort money — or meet their targets — are known to all? With the inequitable and corrupt tax system already dragging down growth and investment, the new coercive measures will create more compliance and enforcement challenges than solve the existing ones.

Published in Dawn, May 6th, 2025