Tax Evasion in Pakistan: Over 2.2 Trillion Rupees Lost in Two Years
FBR Defends Tax Measures Amidst Business Community Concerns Over Finance Bill 2025-26
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Islamabad: The Federal Board of Revenue (FBR) has defended its tax collection measures, especially those introduced in the Finance Bill 2025-26, in response to growing calls from the business community for a relaxation of tax laws. FBR officials emphasized that significant revenue losses could not be sustained and highlighted actions taken against tax officials found misusing their powers.
FBR Addresses Revenue Loss and Tax Official Misconduct
Mr. Sarwar, an FBR official, stated that the massive revenue loss observed could no longer be tolerated. He assured that tax officials who had misused their authority had been subjected to disciplinary action. He further asserted that the FBR had taken punitive measures against its own workforce, a stance he claimed was unparalleled by any other federal or provincial department.
The existing law, in place since 1996, allows for the arrest of individuals if an assistant commissioner has reason to believe that tax evasion is occurring, records are being tampered wiht, or suspects are attempting to flee the country. Tho, Mr. Sarwar pointed out that the latest Finance Bill incorporates multiple safeguards designed to prevent the harassment of businessmen and taxpayers.
Parliamentary Committee Reviews Budget Anomalies and Business Grievances
A parliamentary committee engaged in an extensive discussion regarding several anomalies within the Budget 2025-26. The committee heard briefings from members of various chambers of commerce,with a particular focus on clauses that grant the FBR the power of arrest based on mere suspicion.
State Minister for finance and Revenue, Bilal Azhar Kiyani, informed the committee that the Prime Minister had established a dedicated committee to address the grievances raised by the chambers of commerce. Additionally, a review and redressal committee has been formed to periodically examine and resolve issues faced by the business community.
Mr. Kiyani announced that a circular would soon be issued to clarify the ambiguities highlighted by the chambers, following complete discussions with business representatives.
Concerns Over Finance Bill Amendments and Taxpayer Powers
Senator Saleem Mandviwalla, who chaired the meeting, along with other committee members, concurred with the State minister that seeking amendments to the finance bill so soon after its passage, especially with the International Monetary fund’s (IMF) consent, would not present a favorable image.
another FBR member, dr. Najeeb, acknowledged that the government had indeed diluted certain taxpayer powers due to pushback from coalition partners, parliamentarians, and other stakeholders. He noted a significant divergence between the finance bill initially presented to parliament and the version that was ultimately passed.
Dr. Najeeb conceded that the extensive deliberations on the finance bill with the standing committees of the National Assembly and the Senate had limited the time available for the usual anomaly committees to address all concerns, inadvertently creating room for misunderstandings. However, he maintained that the “element of fear” was being unnecessarily exaggerated.
Recommendations for Software Exports and IT Services
In a separate discussion concerning software exports over the past 15 years, the committee recommended that the State Bank of Pakistan submit data with a clear categorization of the freelancers’ share in software exports.
Furthermore, the committee proposed the removal of periodical and journal subscriptions from the list of IT services.
Published in Dawn, July 25th, 2025