The Tax Laws (Amendment) Ordinance, 2025, promulgated by President Asif Ali Zardari on May 2, allows the Federal Board of Revenue (FBR) to designate tax officers at businesses to monitor production, stocks, goods and services in a bid to ensure tax compliance.
The stated aim of the ordinance is to address urgent legal, administrative, and enforcement gaps in the tax system. It introduces three amendments. The first, related to Sections 138(3A) and 140(6A), concerns the immediate payment of tax demand even if courts grant a stay or an appeal is pending. This targets the longstanding pendency of revenue-impacting litigation at the Supreme Court and in High Courts, where the constitutionality of tax provisions has been challenged.
Since the passage of the 26th Amendment, special benches have been established in the superior judiciary to fast-track tax cases. However, a procedural lacuna had allowed taxpayers 30 days to make payments on confirmed demands, resulting in billions in confirmed revenue remaining unrealized despite clear court verdicts. The amendment seeks to curtail this delay and allow for swift implementation of final judgments issued by the judiciary. This provision does not apply to orders passed by lower appellate forums and does not overrule any stay granted by the Supreme Court or the High Court.
The second amendment allows the posting of tax officers at business premises under Section 175C. This enables revenue monitoring of high-end services and sectors operating outside the scope of the existing sales tax regime. Authorities maintain this would not target traditional traders regulated under Section 40B of the Sales Tax Act, 1990. Instead, it targets high-turnover and under-monitored service segments, including luxury services, upscale hotels and restaurants, event management firms, and high-turnover hatchery businesses. The objective is to address horizontal inequities in the tax base, as the burden of taxation has disproportionately fallen on salaried individuals and manufacturers.
This amendment introduces a monitoring mechanism, subject to inter-agency oversight, ensuring that FBR officers cannot act without accountability or beyond the authorized scope. All operations under this provision will be conducted transparently, under strictly defined SOPs, and in coordination with other regulatory authorities to prevent overreach or harassment.
The third amendment addresses visits of FBR officers to industries not currently accountable to the FBR. A series of rules and STGOs would regulate such visits, which must be authorized through a barcoded letter. Officials are required to record proceedings on a mobile device for transparency. Officers are also provided with standardized proforma documents, which are completed during the visit and submitted both electronically via a mobile application and in hard copy to their respective chief commissioners or FBR Headquarters.
The conduct of these officers is closely monitored by civil intelligence agencies, and any instance of misconduct—whether reported by intelligence or private businesses—is promptly investigated and addressed. Additionally, a comprehensive weekly presentation of all monitoring activities is submitted to the prime minister, ensuring continuous oversight at the highest level.