FBR Granted Power to Arrest Directors, CEOs, and CFOs in Major Tax Fraud Crackdown

In a bold move to tackle tax evasion, the Federal Board of Revenue (FBR) has been granted extensive civil-court powers through the Finance Bill 2025–26. These new provisions authorize Inland Revenue officers to arrest company directors, CEOs, and CFOs involved in tax fraud—without requiring prior permission from the commissioner.

Key Highlights:

  • FBR officers now have legal authority to detain senior corporate executives for suspected tax evasion.
  • Arrested individuals must be presented before a special tax court within 24 hours.
  • Offenses carry severe consequences: up to Rs. 10 million in fines, 10 years of imprisonment, and a 100% recovery penalty on the evaded amount.

These reforms target widespread sales tax fraud, including fake billing, fictitious invoicing, and false input tax adjustments. Any individual who facilitates, benefits from, or conceals such fraudulent activities will be subject to arrest and prosecution.

Recent Background:

This legislative change follows a recent FBR crackdown on fraudulent tax practices across multiple sectors. Several arrests have already been made, including CFOs and directors of high-profile companies, linked to schemes involving billions in evaded sales tax. Investigations revealed massive losses to the national exchequer due to false tax claims and fake documentation.

The government has made it clear that it is serious about strengthening enforcement and holding accountable those responsible for systemic tax abuse. The FBR’s new powers are expected to significantly enhance compliance and deter future violations.