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Tag: Pakistan

  • Pakistan Tobacco Demand Slashed, Farmers Taking Losses

    Pakistan Tobacco Demand Slashed, Farmers Taking Losses

    Tobacco purchasing companies in Pakistan have reduced their demand for the 2026 crop by 13.2 million kg, setting total requirements at 61.627 million kg. This marks the fourth consecutive year of cutbacks, with overall demand falling from 85.5 million kg in 2023 to 77.3 million kg in 2024, 74.8 million kg in 2025. The bulk of purchases will be made by multinational firms, led by Pakistan Tobacco Company and Philip Morris (Pakistan) Ltd, which together account for more than 36 million kg of flue-cured Virginia (FCV) tobacco. The remaining FCV demand will be met by 78 national companies, including Khyber Tobacco. While demand for FCV, dark air-cured, and sun-cured tobacco has declined, requirements for White Patta and burley tobacco have increased slightly.

    Industry experts note that farmers are facing severe financial losses due to limited storage options and price discrepancies between the weighted average price (Rs 719 per kg) and the minimum indicative price (Rs 545 per kg [$1.96]). Companies profited by Rs 6.2 billion ($22.2 million) from surplus purchases at lower rates in 2025, while growers bore the losses. Despite reduced domestic demand, tobacco exports surged from 20 million kg in 2023-24 to 47 million kg in 2024-25, a 135% increase. However, Ayaz Khan, former director of the Pakistan Tobacco Board, said the benefits of rising exports have not reached farmers, who remain vulnerable to falling purchase prices and shrinking demand, leaving them at a disadvantage compared to multinational and national firms.

  • Pakistan to Digitally Monitor Tobacco Manufacturing

    Pakistan to Digitally Monitor Tobacco Manufacturing

    Pakistan’s Federal Board of Revenue (FBR) directed all tobacco manufacturing units to install IP-based CCTV cameras at designated points in factories and green leaf threshing stations to monitor production and reduce tax evasion, according to Sales Tax General Order No. 7 of 2025. The move requires that finished goods cannot leave factory premises unless the production process is fully recorded and monitored in real time. The measure applies to both local and multinational manufacturers and covers all stages from green leaf processing to cigarette production.

    The FBR collects 18% sales tax and federal excise duty on domestic cigarette sales, ranking the sector among the top revenue generators. Authorities believe current collections fall short of potential, estimating that proper monitoring could increase revenues to approximately Rs600 billion ($2.1 billion).

  • Study: 81% of Cigarettes in Pakistan Illegal

    Study: 81% of Cigarettes in Pakistan Illegal

    A new survey by Stop Illegal Trade (SIT) revealed that over 81% of cigarette brands sold in Pakistan lack tax stamps, exposing widespread excise duty evasion. Only 12% of brands were fully compliant, while nearly 7% appeared in both taxed and untaxed forms, suggesting the existence of a parallel illegal distribution network. The report, “The Unchecked Rise of Illicit Cigarettes in Pakistan,” also found that 47% of cigarette brands failed to display mandatory health warnings, and many were being sold below the government’s minimum retail price of Rs 162.25 ($0.57), violating national tobacco control laws.

    SIT’s spokesperson said the findings highlight “regulatory weaknesses” enabling tax evasion and black-market sales that harm both government revenue and public health. The illicit cigarette trade is estimated to make up more than half of Pakistan’s total market, causing annual revenue losses exceeding Rs 415 billion ($1.5 billion).

    SIT urged authorities to intensify retail inspections, enforce compliance, and dismantle the networks behind untaxed and non-compliant cigarette sales.

  • 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.