Tax Lawyers Ask PM Shehbaz to Limit FBR Powers

For context, the Multan Tax Bar Association (MTBA) has pressed Prime Minister Shehbaz Sharif to restrict the Federal Board of Revenue's (FBR) power to raid, inspect and other enforcement measures in the name of tax revenue.

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• The association remarked its concern was not concerning the lawful employ of statutory powers in genuine cases of tax evasion or noncompliance.
• Instead, the tax bar alleged that such powers were, in some cases, being applied primarily to secure immediate tax deposits for gathering revenue collection targets.

In a letter to the prime minister, the MTBA triggered concern over an growth in visits, inspections, raids and search related actions by FBR field formations as the end of a month, quarter or budget period approaches. The association remarked its concern was not concerning the lawful employ of statutory powers in genuine cases of tax evasion or noncompliance. Govt May Allow Private LNG Imports.

Instead, the tax bar alleged that such powers were, in some cases, being applied primarily to secure immediate tax deposits for gathering revenue collection targets. It specifically mentioned enforcement powers under sections 38 and 40 of the Sales Tax Act, 1990, and section 175 of the Income Tax Ordinance, 2001.

MTBA remarked representations received from taxpayers and members of the Bar indicated that some businesses had faced pressure to produce immediate payments that might not otherwise have been legally due at that stage. It additionally alleged that taxpayers had been pressed to account for future sales in the current tax period or arrange advance tax deposits to backing collection targets.

According to the association, such practices, if established, could turn statutory enforcement powers into instruments of revenue pressure rather than mechanisms for investigating and collecting taxes that are actually due. It remarked access, inspection, search and examination powers carry serious consequences for businesses and should be exercised on the basis of relevant material and for purposes permitted by law.

Meanwhile, the MTBA argued that the timing of an inspection, inquiry or search should be determined by the facts of a case and applicable legal requirements rather than the closing date of a revenue period. It cautioned that target-driven enforcement could weaken confidence between taxpayers and the tax administration while placing pressure on business liquidity and working capital.

Meanwhile, the association has asked the prime minister to direct the Finance Ministry and FBR to ensure that enforcement proceedings are not initiated or intensified solely to meet revenue targets. It additionally proposed that any enforcement action be taken to its legal conclusion, including examination of relevant material, proceedings in accordance with the law and, where warranted, issuance of a show cause notice followed by an order after providing the taxpayer an opportunity for a hearing. IMF Tells Pakistan to Fix SOE Laws or Face Loan Delays.

For context, the MTBA further pressed scrutiny of so-called voluntary payments obtained during or immediately after raids, inspections or searches. It remarked payments should only be considered voluntary when produced without threat, pressure or undue influence, and proposed a supervisory mechanism to review unusual collections created immediately after enforcement proceedings during the closing days of a quarter.

While emphasizing that it fully recognized the FBR's responsibility to combat tax evasion and collect all taxes lawfully due to the state, the association additionally called on accountability where enforcement powers were allegedly misused. Stay Connected with ProPakistani.

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Taken together, the developments around tax Lawyers Ask PM Shehbaz to Limit FBR Powers point to a situation that is still moving, and the coming days should bring more clarity.