In a major policy shift, the government has significantly curtailed the Federal Board of Revenue’s (FBR) powers to arrest individuals in tax fraud cases. As per a newly issued Sales Tax General Order, FBR officials must now consult at least two nominated representatives from the business community before initiating any tax fraud investigations that could lead to arrests.

The commissioner inland revenue must obtain approval from the Member (Inland Revenue Operations), but only after convincing business representatives that fraud has occurred. This move follows backlash from the business sector and political pressure, particularly from the PPP, which had initially opposed arrest powers for tax authorities.

Business bodies such as the Lahore Chamber, FPCCI, and APTMA will nominate region-wise representatives, giving the business community considerable say in enforcement actions. Experts see this as a major rollback of recent enforcement powers granted to FBR, casting doubt on the government’s ability to meet its Rs389 billion enforcement target.

Furthermore, the government has relaxed other restrictions, including the treatment of large cash payments and proposed bans on property and car purchases by non-filers — all viewed as setbacks to tax reform and equity.