Industry Sounds Alarm About Illicit Trade

Tobacco industry officials are sounding the alarm over an influx of smuggled and counterfeit cigarettes into Pakistan, reports Pakistan Today.

From July 2023 to November 2023, the industry’s output declined by 40 percent, according to data from the Pakistan Bureau of Statistics. Officials of BAT subsidiary Pakistan Tobacco Co. (PTC) attributed the decrease largely to an increase in illegal tobacco products.

PTC Senior Business Development Manager Qasim Tariq says that around 850 million counterfeit cigarette sticks are currently being sold across Pakistan, causing the government to miss out on PKR5.7 billion in tax collections.

While they together control only 60 percent of the domestic tobacco market, PTC and its competitor, Philip Morris Pakistan, pay 98 percent of the country’s tobacco taxes. The remaining 52 tobacco companies, by contrast, paid only PKR2 billion in taxes during fiscal 2022, while accounting for 40 percent of cigarette market.

A 2019 report by the Federal Board of Revenue report suggested that illicit cigarette trade has a market share of more than 36.2 percent in Pakistan.

Qasim underscored that revenue collections have declined between 2012 and 2016, following the government’s switch to a new tax structure.

On Jan. 13, officers of the Inland Revenue Service Officers conducted a seized 13.77 million non-duty paid cigarettes.