Tag: Pakistan

  • Cigarette Production Plunges in Pakistan

    Cigarette Production Plunges in Pakistan

    Photo: hassan

    Tobacco companies in Pakistan produced 43.9 billion cigarettes in 2022-2023, down from 64.7 billion in the previous fiscal year, reports The News International, citing figures from the Federal Board of Revenue’s (FBR) track-and-trace system.

    The country’s leading manufacturers, Pakistan Tobacco Co. and Philip Morris International, suffered year-to-year production declines of 32 percent and 39 percent, respectively. The production of Khyber Tobacco, by contrast, jumped 48 percent in the most recent financial year.

    The FBR collected tobacco revenues of PKR62.9 billion ($224.3 million) from July to September this year, compared with revenues of PKR177.7 billion in the comparable 2022 quarter.

    The FBR undertook 1,447 “actions of enforcement and seizure with confiscation” during the most recent financial year, according to FBR Project Director of Track and Trace Zaheer Qureshi

    The government is reportedly exploring strategies to boost revenue as part of an anticipated mini-budget in December.

    During a discussion on tobacco taxes, FBR officials attributed lamented the challenges posed by a limited workforce, logistical hurdles and an undocumented economy.

  • Growers Want Amends for Below-Market Prices

    Growers Want Amends for Below-Market Prices

    Photo: Taco Tuinstra

    Tobacco growers in Pakistan have asked tobacco companies to compensate them for tobacco purchased at below-market prices and losses caused by rains and hailstorms in Khyber Pakhtunkhwa Province, reports The News International.

    In a letter to their representative organizations, the farmers said that independent purchasers paid high price while some domestic and multinational companies purchased the produce at a lower rate.

    They urged the organizations to take up the matter with the companies to repay the growers for the lowest price. The tobacco growers also urged the companies to tap into the corporate social responsibilities fund to accommodate the growers.

    Pakistan law requires tobacco companies to spend a certain percentage of their profit on the welfare of farmers.

  • Pakistan Trace System Rolled Out by Year’s End

    Pakistan Trace System Rolled Out by Year’s End

    Image: Tobacco Reporter archive

    Pakistan’s track-and-trace system is expected to be fully installed throughout the tobacco industry by the end of December 2023.

    Two multinationals and one local tobacco company have already installed the Federal Board of Revenue’s (FBR) new automated system while six local companies have installed manual track-and-trace systems.

    Some local companies have raised concerns about the cost of the systems, prompting The Business Recorder to urge the government to offer discounts or installment payments on the equipment.

    According to the FBR, revenue from the tobacco sector has increased following the implementation of the system, with a major increase in the rates of the federal excise duty on cigarettes.

  • Growers Protest Foreign Companies

    Growers Protest Foreign Companies

    Image: hodim

    Tobacco growers in Pakistan held a protest against multinational cigarette manufacturing companies, alleging noncompensation of the tobacco rate procured from growers, according to the Business Recorder.

    “When [the] season began, the tobacco growers provided the crop to the companies on PKR425 [$1.47] (per kilogram), and later it surged to PKR1,400,” said Iqbal Shewa, vice chairman of the Farmers’ Group. Despite repeated requests, the companies are not giving any monetary compensation to the growers on the procurement rate, according to Shewa.

    Growers are on the verge of monetary losses reaching PKR20 million due to noncompensation, according to Shewa. He said that instead of solving the issue, the companies are using delaying tactics.

    It was noted that the growers’ alliance held multiple meetings with the companies to no avail.

  • Pakistan Poised to Enact Tracking System

    Pakistan Poised to Enact Tracking System

    Photo: Tobacco Reporter archive

    Pakistan’s Federal Board of Revenue (FBR) has signed agreements with 22 tobacco manufacturers to install a track-and-trace system at their factories, reports The News International.

    The digital system, which allows the FBR to monitor the production, distribution and sale of tobacco products through unique identification codes and stamps on cigarette packs, is expected to increase the tax revenue from the tobacco sector, which contributes about 1.5 percent of the total tax collection in Pakistan.

    The FBR initiated the system two years ago. Pakistan Tobacco Company (PTC) and Philip Morris International were the first to sign agreements and make the system operations, followed by Khyber Tobacco Co.

    Now the FBR has signed agreements with 18 more manufacturers.

    There are between 26 and 30 tobacco manufacturers in Pakistan, according to FBR estimates, though some of them are not operational or have moved to nominally self-governing territories such as Azad Jammu and Kasmir.

    The implementation of the track-and-trace system has been marred by legal challenges. With the exception of one case, all these challenges have been rejected in court.  

    FBR officials expect the system to become operational by October 2023.

  • Manufacturers Enact Tracking System

    Manufacturers Enact Tracking System

    Image: www.doglikehorse.com

    About 20 local cigarette manufacturing companies signed agreements with Pakistan’s Federal Board of Revenue (FBR) for implementation of a track-and-trace system, according to ProPakistani.

    The local companies have been forced to start implementation of the system due to vacation of stay orders from courts and the deputation of Inland Revenue officials. The FBR has been in a court battle for about two years over implementing the system; the FBR finally won the legal battle and is now enforcing the track-and-trace system at local factories.

    Implementation is at different stages for each company; almost all local manufacturers have signed the agreements with the FBR and begun implementing the track-and-trace system. One company has fully implemented the system while six companies are manually stamping cigarette packs. Some companies have purchased applicators, and other companies have started test runs.

    All manufacturing companies within the jurisdiction of Azad Kashmir have obtained stay orders against the system, however.

  • Pakistan: Cigarettes Seized for Tax Violations

    Pakistan: Cigarettes Seized for Tax Violations

    Photo: sezerozger

    Pakistan’s tax authorities confiscated 650 cartons of cigarettes from Philip Morris (Pakistan), alleging that the products were sold below the minimum retail price, reports Pakistan Today.

    “This action underscores the government’s commitment to upholding tax laws and safeguarding public health,” a Federal Bureau of Revenue official was quoted as saying. “Violations of these regulations not only undermine public health initiatives but also lead to revenue losses for the government.”

    Philip Morris insisted it was in full compliance with tax obligations for all its brand. A company spokesperson said that the company is cooperating with FBR and is dedicated to tackling illicit trade in Pakistan.

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  • Illicit Cigarettes Set to Dominate Pakistan

    Illicit Cigarettes Set to Dominate Pakistan

    Photo: Taco Tuinstra

    Illicit cigarettes may exceed legitimate tobacco sales in Pakistan within the next quarter, warn some industry insiders, according to Profit. The illicit products have already secured more than 40 percent of the market.

    The tobacco industry has criticized the Federal Board of Revenue and the Ministry of Health for their perceived failure to curb the illicit market.

    Sami Zaman, head of external affairs at Pakistan Tobacco Co., warned that if left unchecked, illicit cigarette sales could secure more than 50 percent of the market share in months.

    Illicit cigarettes offer lower price points and many flavor options but lack proper taxation and legally mandated graphic health warnings.

    The industry is having a hard time fighting this due to a supply shortage of legal products; 75 million kg of raw tobacco was secured for the entire cigarette manufacturing industry despite promises of 85 million kg, causing cigarette prices to increase dramatically.

    The licit cigarette industry saw a 44 percent decrease in cigarette manufacturing during June 2023 followed by a 28.4 percent decrease from July 2022 to July 2023.

  • Pakistan Tobacco Growers Reject Price

    Pakistan Tobacco Growers Reject Price

    Image: Tobacco Reporter archive

    Tobacco growers in Pakistan have rejected the per kilogram price set by Pakistan Tobacco Company and Philip Morris International Pakistan, reports Dawn.

    The companies offered PKR425 ($1.48) per kilogram for Virginia tobacco, according to Arif Khan, central president of Ittehad Kashtkaran, Khyber Pakhtunkhwa. Khan said this is unrealistic due to the rising prices of fertilizer, labor, pesticides and other costs.

    The Economic Coordination Council of Federal Ministry for Commerce set the minimum price at PKR310 per kilogram.

    “In the open market, businessmen and small companies are purchasing tobacco at PKR500 per kilogram, offering PKR76 more than the multinational companies,” said Khan, who also noted that if the companies did not increase prices, the growers would be forced to stage protest in front of the local offices.

    “After Eid, we will evolve a joint line of action,” said Liaqat Yousafzai, central president of the Tobacco Growers Association Pakistan, who also said they appealed to growers to stop taking produce to the companies’ buying centers.

  • Farmer Group Calls for Lower Tobacco Tax

    Farmer Group Calls for Lower Tobacco Tax

    Image: Tobacco Reporter archive

    Mushfiq Ali Khan, president of Anjuman-e-Kashtkaran, a farmers’ group, has asked the government of Pakistan to reduce the federal excise duty on cigarettes so the regulated industry can resume purchasing from tobacco farmers, ensuring timely payments and safeguarding farmers’ livelihoods, reports the Pakistan Observer.

    A recent hike in tobacco excise taxes has prompted legal tobacco companies to cut production, driving down demand for leaf and prompting some farmers to sell their leaf on the black market. Farmers are not getting fair returns on their crops due to a decrease in sales in the legal industry, according to Khan. High taxes and a decline in sales, he said, have led the regulated industry to limit tobacco purchases.

    “On the other hand, the illicit cigarette manufacturing industry offers farmers unfair prices for their tobacco, with no guarantee of timely payment. Faced with this predicament, farmers are left with no choice but to rely on the illegal cigarette industry,” he said.