The International Monetary Fund (IMF) raised concerns over tax evasion in Pakistan’s cigarette sector, citing that illicit and untaxed cigarettes now account for up to 50% of the industry. According to sources, concern was raised with Pakistani authorities by the IMF delegation during talks about unlocking a $1 billion loan under the current program.
Sources said that the IMF urged Pakistan to regulate the illegal tobacco market, with discussions also covering a market study on illicit cigarette trade during a detailed session with the Federal Board of Revenue (FBR) regarding the Track and Trace system.
The IMF lauded FBR’s Track and Trace mechanism, noting that it has significantly reduced tax evasion across four key sectors—sugar, cement, fertilizer, and tobacco. However, it expressed dissatisfaction over the retail sector’s tax compliance, stressing the need for improved revenue collection.
