The Federal Board of Revenue (FBR) has unveiled a new procedure for arresting traders involved in tax fraud, following an increase in cases of tax evasion through fake or flying invoices.

These changes are aimed at curbing tax fraud and ensuring a more transparent tax system.

In an official statement, the FBR revealed that traders found guilty of tax fraud would now have their registration suspended and be blacklisted. The process will include issuing a show-cause notice within seven days before placing any business entity on the blacklist, based on evidence.

The new rules also mandate consultation with at least two representatives from the relevant trade association before arresting any trader allegedly involved in tax fraud. This step is intended to ensure that all possible actions are discussed with industry stakeholders before moving forward with arrests.

According to the FBR, once fake or flying invoices are identified by the tax assessment processing cell, a detailed analysis will be conducted by at least two officers who will examine the trader’s transaction data, including purchase and sale records, as well as tax filings.

Legal action will be initiated against those benefiting from tax fraud, including filing an FIR.

Moreover, investigations can only be initiated with the permission of the Commissioner of Inland Revenue, and any arrests must be authorised by the FBR’s Member of Inland Revenue Operations.

The FBR has also made it clear that not only traders but also government officers, officials, or facilitators within institutions found complicit in the fraud will face strict legal action.

Officials have emphasised that these measures are being implemented to promote a more transparent tax system and to combat corruption within the tax framework.