Tag: Pakistan

PTC Disputes Tax Underpayment Charge

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Pakistan Tobacco Co. (PTC) is disputing allegations that legitimate tobacco companies are shortchanging the country’s tax collector, reports the Associated Press of Pakistan.
Earlier this year, an Islamabad-based think tank presented figures showing that Pakistan’s national exchequer collected PKR567 billion ($20.4 billion) less from the tobacco industry than it was entitled to.
“It is important to note that this figure is incorrect, misleading and detached from ground realities,” PTC wrote in a press release. “The only loss incurred to the government of Pakistan by the tobacco industry is because of tax evasion of illicit manufacturers as the legitimate industry pays all applicable duties and taxes.”
Contrary to the report’s suggestion, the legitimate tobacco industry has significantly contributed to the national exchequer, paying PKR148 billion in fiscal year 2021-2022 and PKR173 billion in 2022-2023, according to PTC.
The company highlighted that the government recently recognized PTC as one of Pakistan’s top tax-paying entities. It emphasized importance of a level playing field for the legitimate sector, which is currently undermined by the illicit sector.
March 31, 2024
Sindh Bans Shisha and E-cigs in Public

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The government of Sindh, Pakistan, has banned the use of shisha and e-cigarettes in public places. The government directed authorities to implement the Prohibition of Smoking and Protection of Nonsmokers Health Ordinance 2002.
The ban includes hotels, restaurants, parks, cafes and picnic areas; however, the ordinance is not being implemented in “true and spirit,” according to Pakistan Today.
The health department has directed authorities to “take relevant action against the violators” of the ban.
February 28, 2024
Pakistan: Growers Want Control Of Tobacco

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Pakistani tobacco growers want control of the crop, stating that the federal government should no longer have authority over it because it is the domain of the provincial government under the 18th Amendment, reports Dawn.
The growers have said that the Pakistan Tobacco Board (PTB) has not looked out for their interests but rather the interests of the buyers and themselves.
“Its officials have played a controversial role and gave importance to their personal interest over the farmers’ interest,” said Khalid Khan, district president of the Kisan Board. “When PTB officials and representatives of the companies remain in league, how [will] the poor farmers survive?”
Azizur Rehman, a leading grower in Maneri Bala village, said that if the PTB and companies gave rights to the growers, it would improve growers’ financial positions and bring more people into the farming profession.
February 27, 2024
Industry Sounds Alarm About Illicit Trade

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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.
January 25, 2024
Khyber Pakhtunkhwa Bans Vapes

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The government of Pakistan’s Khyber Pakhtunkhwa province has banned the storage, sale and use of e-cigarettes for 60 days, according to the Associated Press of Pakistan.
All deputy commissioners have been directed to impose a complete ban on the sale of e-cigarettes and vapes to those under age 21 and its sale and storage within a 50-meter radius of all educational institutions in the province.
Those caught violating these orders will face legal consequences under Section 188 of the Pakistan Penal Code.
The interim ban follows a series of meetings with the Provincial Alliance for Sustainable Tobacco Control, Blue Veins and KPTCC focused on the dangers of e-cigarettes and vapes and that examined global legislative and policy practices regarding the products’ sale and storage.
“The decision has been taken in wake of alarming increase in use of electronic cigarettes (e-cigarettes) and vaping devices particularly among children and youth in the province,” said an official notification by the Home and Tribal Affairs Department of Khyber Pakhtukhwa, according to the Pakistan Observer.
“This interim ban is a commendable step by the KP government, reflecting its proactive approach to public health,” said Qamar Naseem, civil society activist. “However, we must solidify this progress through comprehensive provincial legislation to ensure a permanent solution to this growing health concern.”
“This ban is a significant victory for the health and well-being of our children and youth,” said Sana Ahmad, coordinator of the Child Rights Movement KP. “It prevents easy access to addictive substances and protects our future generations from the allure of harmful vaping products.”
“We, the healthcare providers, appreciate the governor and chief secretary of Khyber Pakhtunkhwa for this decisive ban,” said Qazi Shahbaz, president of the Provincial Doctors Association. “It’s a step forward in the right direction, and we now urge the government to enact comprehensive legislation for a complete ban. This is not just a win for public health but a strong message that the health and safety of our citizens, especially our youth, are of paramount importance.”
January 19, 2024
Pakistan Growers Reject Purchasing Price

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Tobacco growers in Pakistan have rejected the PKR505 ($1.80) per kg tobacco purchasing price set by the Ministry of Commerce for the upcoming marketing season, reports Dawn.
During a Jan. 13 meeting in the Dagi, Swabi District, grower representatives blasted the Pakistan Tobacco Board for being partial to tobacco buyers in price negotiations. They also accused the purchasing companies of negotiating in bad faith.
The growers’ leaders demanded that the per-kg tobacco rate should be fixed in proportion to the prevailing record inflation and the high expenditures incurred on production of the crop.
Grower representative Arif Ali recalled that the companies bought tobacco from growers at PKR425 per kg at initial stage in the 2023 season, but the market price later jumped to PKR1,200 per kg. He said the firms had also failed to fulfil a promise to pay arrears at the end of the season as per the final rate.
The growers are now planning sit-ins outside the gates of the tobacco purchase centers in the production areas. They also threatened to switch to other crops if their demands were not met.
January 14, 2024
Pakistan Unlikely to Meet Tracing Deadline

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Pakistan is unlikely to meet the December deadline for full implementation of a new track-and-trace system for tobacco products, reports The News International.
While leading manufacturers, such as Pakistan Tobacco Co. (PTC), Philip Morris International and Khyber Tobacco Co. have incorporated the system into their production facilities, other manufacturers, including Civil Tobacco, Frontier Leaf Tobacco, Falcon Cigarettes Industry, Indus Tobacco Co. and Maneri Tobacco International, have done so only partially. Yet other companies have either refused to comply or dragged their feet, citing technical and financial difficulties.
The partial implementation raises concerns about the effectiveness of the track-and-trace system, which relies on barcodes, unique identification numbers and a central monitoring system to track the movement of tobacco products from production to sale.
“The track and trace system must be implemented across the industry for it to be successful and yield the desired results,” an industry official was quoted as saying. “Secondly, comprehensive and effective enforcement needs to be carried out to ensure that no pack of cigarettes is sold without a stamp.”
The system has been successful in other countries, such as Turkey, Brazil and Kenya, where it has helped reduce tax evasion and illicit trade in the tobacco industry. Industry officials urged Pakistan’s Federal Board of Revenue to take strict action against the non-compliant manufacturers and enforce the system across the industry.
December 24, 2023
Pakistan Tobacco Sales Plunge After Tax Hike

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Cigarette consumption in Pakistan dropped by 20 billion sticks following an unprecedented increase in the country’s federal excise duty (FED), reports the Associated Press of Pakistan, citing figures from Capital Calling.
In February 2023, the government hiked the FED by 146 percent, following several years of comparatively small increases.
In its study, Capital Calling found that the tax hike prompted 14 percent of smokers to quit, which caused cigarette consumption to decline by 11 billion sticks. Ten percent of smokers reduced their intake, which drove consumption down by an additional 9 billion cigarettes, according to the study.
In 2022, Pakistan’s total cigarette consumption was estimated between 72 billion and 80 billion sticks, a figure that includes officially declared production, smuggled cigarettes, counterfeit products and cigarettes for which duties have not been paid.
According to the new study, the volume now stands at around 62 to 64 billion sticks.
Capital Calling expects the Federal Board of Revenue to collect between PKR230 billion ($809.87 million) and PKR240 billion in cigarette duties this year. In 2018, the figure was PKR87 billion.
December 11, 2023
Pakistan Urged to Swap Tobacco For Food

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Pakistan should replace tobacco with food crops, according to experts in nutrition, agriculture and the environment, reports UrduPoint.
Speaking with the Associated Press of Pakistan, the specialists said such a transformation is necessary not only to improve public health but also to overcome the food insecurity faced by more than one third of the population.
In 2018, 36.9 percent of Pakistanis struggled with food insecurity, data from the National Nutrition Survey reveals. Massive floods at home and war in Ukraine have plunged an additional 2.5 million people into hunger according to the Pakistan Fruits and Vegetable Importers and Exporters Association (PFVA).
The group says Pakistan now relies on imports for food items such as wheat, pulses, chickpeas, garlic and ginger. However, a prevailing shortage of hard currency makes it difficult for importers to obtain letters of credit.
PFVA Chief Waheed Ahmad urged policymakers to capitalize on this year’s World No Tobacco Day theme, “Grow Food, Not Tobacco.”
Tobacco is grown in all four provinces and is a significant part of Khyber Pakhtunkhwa’s economy, where farmers cultivate approximately 30,000 ha of the golden leaf.
Taimoor Khan, general secretary of the Khyber Pakhtunkhwa Association for Excellence in Agriculture, suggested that if half of this area were converted into growing a new variety of garlic, NARC G1, the farmers would make a remarkable profit.
Khan also called into question the economic contribution of tobacco farming, which is believed to generate revenues of PKR120 billion annually ($416.24 million). The cost of dealing with the health impact of tobacco consumption exceeds the tobacco tax take by a factor of three, he said.
“By transforming tobacco farming to food production, we can create ripple effects that promotes food security, improves public health, contributes to the overall well-being of our communities and benefit the environment,” said Aftab Alam Khan, CEO of Resilient Future International.
The speakers also cited research showing that tobacco cultivation requires heavy use of pesticides and fertilizers, which causes soil degradation, thus lowering the used land’s capacity to grow other crops.
According to the National Health Services in 2018, almost 23.9 million adults currently use tobacco in any form in Pakistan. Around 163,600 people die each year in the country due to tobacco and almost 31,000 of these deaths are due to exposure to second-hand smoke.
Critics of “Grow Food, not Tobacco” campaign have suggested that the theme creates a false dichotomy, as tobacco and food production are not mutually exclusive.
November 19, 2023
Track-and-Trace Honored in the Breach

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Only two out of the more than 40 cigarette manufacturers in Pakistan have properly implemented the country’s track-and-trace system, according to British American Tobacco, reports The Nation.
Speaking during a media briefing organized by the Pakistan Tobacco Company (PTC) in Islamabad, BAT’s area head of legal and external affairs for the Asia Pacific, Middle East and Africa regions, Mona Iskandarani, stressed the importance of timely implementation and enforcement of the track-and-trace system.
“We acknowledge the recent enforcement initiatives undertaken by the Federal Board of Revenue in Pakistan but we need sustained enforcement efforts across the supply chain to curb the menace of illicit cigarette trade in Pakistan,” said Iskandarani.
PTC’s legal and external affairs director, Asad Shah, pointed out that while track-and-trace systems have been implemented in various countries, the system does not offer a silver bullet. Rather, it serves as a tool to facilitate law enforcement agencies to carry out raids and seizures of tax evaded products, he said.
Despite a lapse of 15 months since the implementation deadline, only two out of over 40 cigarette manufacturers have implemented the track-and-trace in true letter and spirit, Shah lamented. Instead of declining, tax evasion has grown in the tobacco sector since the system became mandatory, he said.
The share of illicit cigarette sales is projected to grow from 37 percent of the market in fiscal 2021-2022 to approximately 63 percent by the end of fiscal 2023-2024, potentially causing the government lose PKR310 billion ($1.08 billion) in tax revenues in fiscal 2023-2024.
November 8, 2023