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Tag: Pakistan

  • Pakistan Sees Cigarette Revenue Fall Despite Huge Tax Hike

    Pakistan Sees Cigarette Revenue Fall Despite Huge Tax Hike

    Despite a 200% increase in duty rates, Pakistan’s Federal Board of Revenue (FBR) reported a 4.1% drop in Federal Excise Duty (FED) collection from the cigarette sector, falling to Rs225.5 billion ($789.3 million) in FY2024-25 from Rs235 billion ($822.5 million) the previous year. Officials attributed the decline to a growing illicit cigarette market, which continues to undermine tax collection.

    The sector’s share in total FED revenue plunged from 40.7% in FY24 to 29.4% in FY25, highlighting enforcement challenges and the government’s struggle to curb illegal production and sales. Higher taxes have reportedly pushed consumers toward untaxed brands, further reducing formal industry revenue.

    FBR officials warned that without stronger enforcement against illicit cigarette trade, the formal tobacco industry will continue to shrink, depriving the government of vital revenue for development and public health programs.

  • Modernization and Enforcement Needed for Pakistan’s Illicit Crisis

    Modernization and Enforcement Needed for Pakistan’s Illicit Crisis

    Pakistan’s tobacco industry is facing mounting pressure as illicit cigarettes tighten their grip on the market, eroding government revenue and undermining the legitimate sector, according to experts. Macroeconomic analyst Osama Siddiqui said the country needs a robust track-and-trace system and stronger coordination among enforcement and revenue authorities to monitor production, distribution, and retail.

    “Without a decisive crackdown on the illicit tobacco trade, Pakistan’s legal industry will continue to suffer while the black market thrives unchecked,” Siddiqui said. “A modernized supply chain and sustained enforcement are the only ways to reclaim lost revenue and restore market fairness.”

    Recent estimates indicate that illicit cigarettes now make up more than half of total sales, costing the national exchequer over Rs 415 billion ($1.5 billion) annually. The smuggled, untaxed, and/or products sold below the legal minimum price continue to weaken the formal industry’s competitiveness while fueling organized black-market networks, experts say.

  • Pakistani Court Strikes Down Local Tobacco Excise Duty

    Pakistani Court Strikes Down Local Tobacco Excise Duty

    Pakistan’s Peshawar High Court declared the Khyber Pakhtunkhwa government’s provincial excise duty on unmanufactured tobacco unconstitutional. The bench ruled in favor of multiple petitions filed by leading tobacco companies, including Pakistan Tobacco Company, stating that the relevant provisions of the KP Finance Act, 2024 conflicted with the Constitution.

    The petitioners challenged the Rs50 ($0.18) per kilogram levy on unmanufactured tobacco, arguing that excise duties fall exclusively under federal jurisdiction under the Federal Legislative List, and that the provincial assembly had no authority to impose a parallel duty. Lawyers for the petitioners emphasized that federal excise duty (FED) on tobacco is already administered by the Federal Board of Revenue under the Federal Excise Act, 2005, and the KP law encroached on parliamentary powers.

    The court sided with the petitioners, agreeing that following the Eighteenth Amendment, the omission of the concurrent legislative list gave parliament exclusive power over matters such as excise duties, making the provincial tobacco levy ultra vires.

  • Pakistan Tobacco Farmers in Crisis as PTB Surplus Order Flouted

    Pakistan Tobacco Farmers in Crisis as PTB Surplus Order Flouted

    Tobacco farmers in Khyber Pakhtunkhwa and Punjab are struggling as local companies fail to comply with the Pakistan Tobacco Board’s (PTB) September directive to purchase 40 million kilograms of surplus crop, according to Business Reporter. While some major firms have met their obligations, most local companies have delayed or refused purchases, leaving thousands of farmers with unsold tobacco and mounting financial losses, the article said.

    Farmers report that companies are buying tobacco below the Minimum Indicative Price and failing to honor payment terms, forcing growers to sell at throwaway prices to middlemen. In Swabi, for example, flue-cured Virginia tobacco remains in storage with no buyers in sight.

    Experts warn that issuing surplus orders without a monitoring framework or penalties has left farmers exposed. Compliant companies face liquidity and storage constraints, while non-compliant firms distort market dynamics. Industry analysts suggest that a second surplus order may be considered, but without stricter oversight, its impact could be limited.

    The crisis comes amid broader challenges for Pakistan’s legal tobacco industry, including falling domestic demand and economic pressures. Farmers emphasize that tobacco is a family livelihood, and the government’s lack of enforcement risks eroding trust in regulatory safeguards.

  • Pakistan to Ban Sale of Vapes to Minors

    Pakistan to Ban Sale of Vapes to Minors

    A new bill has been submitted in Pakistan’s Senate aiming to ban the sale of e-cigarettes, vapes, and e-shisha to consumers under the age of 18, reports Bloom Pakistan. The bill also calls for a ban on use of these products in public places and for restrictions on advertising, promotion, and sponsorship.

    Those caught violating the ban will face a fine of PKR50,000 ($176.82) for a first offense and PKR100,000 for a second offense. Those caught selling these products within 50 meters of educational institutions will face fines of PKR200,000, and repeat violations could face up to PKR500,000 in fines.

  • Philip Morris Voluntarily Delists from Pakistan Stock Exchange

    Philip Morris Voluntarily Delists from Pakistan Stock Exchange

    The Pakistan Stock Exchange (PSX) has accepted the voluntary delisting request from Philip Morris from its index, reports Dawn.

    Philip Morris is one of the leading tobacco companies operating in Pakistan. The company was voluntarily delisted under PSX Regulation 5.14 and Section 19(5) of the Securities Act, 2015. The delisting is effective Oct. 6.

    “The shareholders of the company, who may desire to avail the opportunity of buy back of shares by the sponsors, are advised to approach Topline Securities,” according to a press release. “The purchase agent and sponsor of the company have already submitted an undertaking to purchase the remaining shares held by the minority shareholders at a price of PKR1,300 ($4.58) per share, which is valid up to September 29, 2026.”

  • Illicit Cigarettes Grip Majority Share in Pakistan

    Illicit Cigarettes Grip Majority Share in Pakistan

    Pakistan’s tobacco industry is facing a mounting crisis as illicit cigarettes now account for an estimated 56–58% of the market, costing the government more than Rs400 billion ($1.4 billion) annually in lost tax revenue. Legal tobacco companies, which contribute nearly Rs270 billion ($945 million) in taxes each year, have seen their market share plummet amid growing competition from counterfeit and untaxed products.

    Industry experts point to weak enforcement of Pakistan’s Track & Trace system, a digital tax-stamp program meant to monitor production and sales. While Prime Minister Shehbaz Sharif has directed authorities to accelerate its rollout, implementation remains inconsistent, allowing fake and unregistered brands to flourish and evade minimum pricing rules and taxation.

    Analysts warn that without decisive action, illicit trade will continue to destabilize the economy and undermine legitimate businesses. They recommend tighter border controls, stronger retailer-level enforcement, and harsher penalties for smuggling and counterfeiting. “Educating retailers on how tax stamps work and how to verify legal products is also crucial in preventing the spread of untaxed goods,” said macroeconomic analyst Osama Siddiqui.

  • Pakistan’s Tobacco Farmers Say Delayed Quotas Spark $23M Loss

    Pakistan’s Tobacco Farmers Say Delayed Quotas Spark $23M Loss

    Tobacco growers in Pakistan claim delayed quota announcements and reduced allocations have triggered overproduction, a price crash, and losses exceeding Rs6.56 billion ($23 million). According to the Dawn, the government normally sets quotas by October, but this year’s lower quota was delayed until December, forcing farmers to sell surplus tobacco at the minimum indicative price (MIP) of Rs548 ($1.92) per kg—far below the market average of Rs720 ($2.52). Growers accuse multinational and local companies of exploiting the situation by purchasing surplus cheaply.

    According to the Dawn, industry figures warn that farmers are being squeezed between rising production costs and falling incomes, with many unable to recover expenses. According to the Tobacco Growers Association, companies have failed to meet quota commitments, while export figures tell a different story—Virginia tobacco exports jumped 129% to 48 million kilograms in 2024-25, even as domestic quotas were cut, the newspaper said. Farmers claim losses of up to Rs3 million ($10,500) per hectare under current pricing.

    The downturn threatens broader economic impacts, including reduced government revenue, falling exports, and job losses in tobacco-producing regions. Growers also point to climate-related crop damage this year, for which they have received no compensation. The National Assembly’s standing committee on tobacco is set to meet in Islamabad on September 23 to discuss possible relief measures, though farmers remain skeptical about immediate action.

  • Pakistan’s Illegal Cigarette Market Surges to 42.4%

    Pakistan’s Illegal Cigarette Market Surges to 42.4%

    The illegal cigarette trade in Pakistan surged to 42.4% of the market, leading to major losses for the national exchequer, according to an ARY News report. The market for illicit cigarettes has grown 171% since 2019, outpacing the 154% increase in taxes and duties on legal cigarettes. The highest shares of illegal consumption were recorded in Lahore, Kasur, Sheikhupura, and Nankana.

    Experts attribute the growth in smuggling and illegal sales to the rising Federal Excise Duty on legal cigarettes, which has pushed consumers toward cheaper, unregulated alternatives.

  • Pakistan Tobacco Board Criticized over Multinational Quota

    Pakistan Tobacco Board Criticized over Multinational Quota

    Leaders of the Ittehad Kashthkaran Khyber Pakhtunkhwa (IKKP) said a multinational tobacco company was instructed by the Pakistan Tobacco Board (PTB) to purchase 1.5 million kg of flue-cured Virginia (FCV) from Swabi growers, guaranteeing a minimum price of Rs743 ($2.60) per kg, according to an article published today by the local e-paper Dawn.

     “An official of a multinational national company said on condition of anonymity that the quota which was given to Philips Morris International (PMI) Pakistan was actually agreed with the Swabi growers under the agreements executed with them as it was purchased by the PMI in Shergar, Mardan district, but the PTB officials bound them to buy the 1.5 million kg tobacco in Swabi,” the article credited to an unnamed correspondent said.

    In the article, IKKP leaders criticized government inaction and PTB policies, urging that remaining tobacco be purchased promptly to prevent financial losses for farmers, who rely heavily on this crop for their yearly income. They said with a large quantity remaining unpurchased, the PTB should also oblige other companies to buy the crop from the farmers on time and give up the policy of declaring the remaining tobacco surplus to be purchased from the farmers at low price.

    “The PTB has not played its due role,” Daud Jan Khan, central vice-chairman of the IKKP, was quoted. “The companies have also left no stone unturned to cause as much financial damage to tobacco growers as they could.”