FBR Plans Revamp of Tax Dispute Mechanism with Stakeholder Input
By Monitoring Desk
ISLAMABAD – July 21, 2025
In a major step toward improving the efficiency and credibility of Pakistan’s tax dispute resolution system, the Federal Board of Revenue (FBR) has initiated consultations with stakeholders to reform the process of appointing members to the Alternative Dispute Resolution Committee (ADRC).
According to Dr. Ishtiaq, Director General (Law) at the FBR, the board is in the process of collecting feedback from legal and tax experts, industry representatives, and business stakeholders to develop a new framework that ensures greater transparency and trust in the ADRC system.
“The FBR will prepare a comprehensive report after the consultation process concludes. Our aim is to make the committee more transparent and credible,” said Dr. Ishtiaq.
The move comes in response to a directive issued by the Supreme Court of Pakistan. During a hearing on July 3, a two-member bench headed by Chief Justice Yahya Afridi ordered the FBR to submit a detailed report on the structure and functioning of the ADRC by July 24, following a petition filed by Zarai Taraqiati Bank Ltd.
Dr. Ishtiaq informed the court that the FBR welcomes constructive suggestions under the law and is actively engaging with relevant stakeholders to gather input. The Chief Justice subsequently granted permission to the FBR to proceed with its consultative process.
Growing Need for ADR Reform
Commenting on the initiative, Advocate Hafiz Ahsaan Ahmad Khokhar, a well-known constitutional and tax law expert, emphasized the urgent need to reform the existing tax litigation system. He said that Pakistan’s judiciary is currently overwhelmed with thousands of unresolved tax cases, many involving hundreds of billions of rupees.
“A well-structured and effective ADR system is essential to reduce the burden on the judiciary, resolve tax disputes efficiently, and ensure timely recovery of government revenue,” he said.
Khokhar pointed out that the current litigation-based model creates prolonged uncertainty for businesses, discourages investment, and stalls revenue collection efforts.
Policy Implications
The ADRC was initially introduced to provide an alternative mechanism for resolving tax disputes without the need for lengthy court proceedings. However, questions have been raised over its effectiveness, impartiality, and structure—particularly regarding how committee members are appointed.
By revisiting the appointment process and incorporating stakeholder input, the FBR hopes to restore confidence in the ADRC and encourage its use as a credible alternative to traditional litigation in tax matters.
The forthcoming report, expected by the end of July, will play a key role in shaping the future of tax dispute resolution in Pakistan, with potential long-term benefits for both the business community and the state’s revenue authority.