The Multan Tax Bar Association (MTBA) has urged 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.
In a letter to the prime minister, the MTBA raised concerns over an increase 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 said its concern was not about the lawful use of statutory powers in genuine cases of tax evasion or noncompliance.
Instead, the tax bar alleged that such powers were, in some cases, being used primarily to secure immediate tax deposits for meeting 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 said representations received from taxpayers and members of the Bar indicated that some businesses had faced pressure to make immediate payments that might not otherwise have been legally due at that stage.
It also alleged that taxpayers had been pressed to account for future sales in the current tax period or arrange advance tax deposits to support 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 said 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.
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 warned that target-driven enforcement could weaken confidence between taxpayers and the tax administration while placing pressure on business liquidity and working capital.
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 also 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.
The MTBA further called for scrutiny of so-called voluntary payments obtained during or immediately after raids, inspections or searches. It said payments should only be considered voluntary when made without threat, pressure or undue influence, and proposed a supervisory mechanism to review unusual collections made immediately after enforcement proceedings during the closing days of a quarter.
The association also called for accountability where enforcement powers were allegedly misused, while emphasizing that it fully recognized the FBR’s responsibility to combat tax evasion and collect all taxes lawfully due to the state.
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