Federal Board of Revenue (FBR) Chairman Rashid Mahmoud Langrial defended the proposed arrest powers for tax fraud under Pakistan’s Finance Bill 2025-26 during a Senate Standing Committee on Finance meeting on June 14, 2025.
Citing Rs1.61 trillion in tax evasion by the top 5% of households, Langrial argued the powers align with global practices, but lawmakers raised concerns about potential misuse, per Geo News.
Langrial told the Senate committee that the Finance Bill’s provisions, granting FBR officers Code of Criminal Procedure (CrPC) powers to arrest CEOs, CFOs, and directors for tax fraud, are necessary to combat evasion. He highlighted that Pakistan’s 67-million workforce sees significant tax evasion, with the top 1% evading Rs1,233 billion, the top 5% Rs1,611 billion, and the remaining 95% just Rs140 billion. Comparing Pakistan to India and Bangladesh, where tax officers have arrest authority, he stated, “No country in the world prohibits tax officers from making arrests for tax fraud,” per The News.
FBR chief says there's no country in world where tax officers were not allowed to make arrests for tax fraud
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— The News (@thenews_intl) June 15, 2025Senator Anusha Rahman (PML-N) raised concerns about the Federal Board of Revenue’s (FBR) ability to make arrests based solely on the perceived intent to commit fraud, arguing that this could lead to overreach. Senators Farooq H. Naek (PPP) and Shibli Faraz (PTI) also expressed their opposition to these powers, with Faraz warning that it could result in a “police state.”
The Pakistan Business Council voiced similar concerns, urging the government to reconsider the legislation, as they feared it could negatively impact businesses. In light of these worries, the committee recommended that Anti-Money Laundering (AML) notices be linked to approvals from the Finance Minister and the FBR Chairman, reflecting the unease regarding the FBR’s scope of enforcement.
Finance Bill 2025-26 Context
The Finance Bill 2025-26, part of a Rs17.57 trillion budget aiming for 4.2% GDP growth, sets an FBR tax collection target of Rs14,131 billion, up 18.7% from 2024-25, with Rs8,206 billion allocated to provinces, per Finance Minister Muhammad Aurangzeb’s budget speech, reported by The Express Tribune. Non-tax revenue is targeted at Rs5,147 billion, while federal expenditure, including Rs8,207 billion for debt servicing, underscores fiscal challenges. The Senate committee also proposed removing an 18% GST on solar panel imports and raising minimum wages to Rs40,000 from Rs37,000.
Langrial criticised protectionist tariffs, arguing that they foster inefficiency by allowing unqualified CEOs to thrive. He called for their abolition to enhance competitiveness. The committee examined the proposed Directorate General of Intelligence and Risk Management of Customs, which would hold powers under the AML Act. In response, Finance Minister Aurangzeb committed to reviewing AML enforcement. Additionally, a new section (187A) establishes that vehicles suspected of being tampered with will be presumed smuggled, requiring their confiscation. The committee recommended that these vehicles be destroyed within 30 days.
