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In a bold move to clamp down on tax fraud, the Federal Board of Revenue (FBR) has granted arrest powers to Inland Revenue officers, targeting company directors, CEOs, and CFOs involved in suspected tax crimes.
Under the Finance Bill 2025-26, officers can arrest individuals based on evidence suggesting tax evasion or fraud, with prior approval from the Commissioner.
In urgent cases, arrests can be made without prior approval, provided they’re immediately reported with documented reasons.
The new law states that anyone found personally responsible for a company’s fraudulent actions – regardless of title – can be held liable.
READ: Non-filers banned from buying property, vehicles, opening bank accounts
However, the arrest of individuals does not absolve the company from its tax liabilities, including penalties and default surcharges.
If the Commissioner deems the arrest unjustified or made with intent to deceive, the person must be released, and an inquiry may be initiated against the officer who made the arrest.
The law also empowers officers to detain those who encourage tax fraud, ensuring thorough action against those aiding or facilitating illegal financial conduct.
This development is expected to send a strong message to corporate entities about tax compliance. FBR will carry out arrests under the Code of Criminal Procedure, 1898, unless otherwise specified.
