ISLAMABAD: The Federal Board of Revenue (FBR) has given explicit powers to the Inland Revenue officers to arrest directors, chief executive officers or the chief financial officers of companies and abettors of tax fraud.
The powers have been extended to the IR officials through Finance Bill (2025-26).
According to the new powers to arrest, the officer of Inland Revenue, during the investigation, having reason to believe on the basis of evidence that actions of any person may have caused or attempted to cause tax fraud or any other offence warranting prosecution under this Act, may cause arrest of such person with prior approval of the Commissioner.
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Where an officer of Inland Revenue is of the opinion that delay in arrest may enable the accused to evade the process of law or circumstances exist in which obtaining prior approval of the Commissioner is not practicable, he may arrest accused without prior approval of the Commissioner and immediately report the arrest of the accused to the Commissioner.
Such report shall contain a summary of all material facts liable to be entered in the register of arrests and detentions and shall be accompanied with a copy of the grounds of arrest of such person.
The Commissioner may, if he believes that there was no sufficient evidence or reasonable ground for arrest of a person without approval or the arrest was made with malafide intent, direct the officer of Inland Revenue to release forthwith the accused so arrested.
The Commissioner shall then refer the matter to the Chief Commissioner for fact finding inquiry if he believes that the arrest made was without sufficient evidence or reasonable ground or made with malafide intention.
Where the person suspected of tax fraud or any offence warranting prosecution under this Act is a company, every director, chief executive officer or the chief financial officer or by whatever name he may be called, of that company whom the officer of Inland Revenue has reason to believe is personally responsible for actions of the company committing the tax fraud or any offence warranting prosecution under this Act shall be liable to arrest.
Provided that any arrest shall not absolve the company from the liabilities of tax sought to be evaded, default surcharge and penalty under this Act.
All arrests made under this Act shall be carried out, unless inconsistent with the provisions of this Act, in accordance with the relevant provisions of the Code of Criminal Procedure, 1898.
An officer of Inland Revenue, not below the rank of Assistant Commissioner or any other officer authorised by the Board in this behalf, who on the basis of material evidence has reason to believe that any person is an abettor of tax fraud or any offence warranting prosecution under the Act, may cause arrest of such person on approval regarding investigation and arrest by the Commissioner, Finance Bill added.
Copyright Business Recorder, 2025
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