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Tag: Pakistan

  • Illicits to Surpass Half of Pakistan’s Market

    Illicits to Surpass Half of Pakistan’s Market

    Photo: Taco Tuinstra

    The share of illicit products on Pakistan’s tobacco market is expected to reach 56 percent by the end of 2024, reports Ary News.

    According to a recent Ipsos survey, more than 165 brands of cigarettes are being sold in the country without tax stamps, depriving the government of PKR 300 billion in annual tax revenue.

    In addition, 104 cigarette brands are being sold below the minimum price.

    The shift toward duty-free and smuggled cigarette brands is facilitated by the availability of larger pack sizes and exacerbates the issue of tax evasion, according to the publication.

    Stakeholders have been calling for stricter enforcement of existing regulations, enhanced enforcement and new tax policies.

  • Khyber Pakhtunkhwa Mulls Steep Tax Hike

    Khyber Pakhtunkhwa Mulls Steep Tax Hike

    Photo: Taco Tuinstra

    Pakistan’s Khyber Pakhtunkhwa government is mulling an increase in the local tobacco tax (cess) by 400 percent, reports Pakistan Today. The increase is expected to generate revenue of more than PKR2 billion ($7.2 million) annually.

    A meeting between Muzammil Aslam, advisor to the chief minister of finance; Aqibullah Khan, provincial minister for irrigation; Akmal Khatak, director general of excise; and a representative delegation of tobacco growers approved a proposal to increase the tobacco development cess by PKR50 per kilogram for Viginia tobacco, PKR30 per kilogram for white leaf rustica tobacco and PKR20 per kilogram for niswar tobacco.

    The tobacco development cess is not equal to the actual price of tobacco, the meeting was informed. Various proposals are under consideration to increase the cess. An action plan for exports is being prepared to increase income from tobacco exports, according to Aslam.

    The provincial government currently earns PKR500 million annually from tobacco taxes.

  • Pakistan Advised to Reject 10-Stick Packs

    Pakistan Advised to Reject 10-Stick Packs

    Photo: Taco Tuinstra

    Health advocates are urging the government of Pakistan to reject an application by Pakistan Tobacco Co. (PTC) for permission to pack cigarettes in cartons of 10 sticks, reports The Nation.

    According to Malik Imran Ahmed, country head of the Campaign for Tobacco-Free Kids, 10-stick packs would undermine efforts to discourage smoking among young people and other at-risk demographics.

    To deter consumption by minors and other at-risk groups, Pakistan law requires tobacco companies to sell cigarettes in packs of at least 20 cigarettes. Sales of individual sticks are permitted, however.

    The rule is placing at risk a large order for PTC to deliver $20.5 million worth of cigarettes to Sudan by mid-May. The contract requires PTC to supply the cigarettes in packs of 10 sticks each. Sudan does not have minimum stick laws, according to PTC officials.

    PTC has requested the government to amend the rules and limit the 10-pack selling restriction to domestic consumption, according to Tribune.

    The Ministry of Health has referred the matter to the Ministry of Foreign Affairs to seek its input on the matter in light of the World Health Organization Framework Convention on Tobacco Control.

    In 2019, PTC also lost an export order due to a lack of clarity on 10-pack cigarette manufacturing. At that time, the Ministry of Commerce gave the go-ahead for exports, but the Ministry of Health objected.

    PTC has been exporting cigarettes since 2019 and has earned $156 million from that business to date. In 2023, the company paid PKR148 billion ($531.35 million) in taxes, making it the country’s second-largest taxpayer after Pakistan State Oil.

  • PMI Urges Action Against Illicit Trade

    PMI Urges Action Against Illicit Trade

    Photo: alexlmx

    Philip Morris Pakistan Limited (PMPKL) has urged action against the growing presence of tax-avoiding products on the country’s tobacco market, reports  The Express Tribune

    In a media briefing, PMPKL Head of Communications Andleeb Uroos Ahmed said the company’s income had plunged by 86 percent in 2023. He attributed the decline to last year’s hike in Federal Excise Duty (FED), which doubled cigarette prices, and the subsequent escalation in market share of illicit products.

    This condition has provided an ample opportunity for numerous local illicit cigarette manufacturers, notably in Khyber Pakhtunkhwa and Azad Jammu & Kashmir, to amass substantial market share while contributing minimally to national revenue, according to critics of the tax hike.

    Illicit cigarettes now command a 63 percent market share, causing the exchequer to miss out on  PKR310 billion ($1.11 billion) in tax collections annually.

    While acknowledging government efforts such as the introduction of tax stamps, Ahmed expressed concern about lax enforcement.

    Stressing the interests of tax-paying companies and government’s need for sustainable revenue, she suggested including tax-evading cigarette manufacturers in the tax net instead of burdening the legitimate industry with additional taxes.

    By curtailing tax evasion, she calculated, the Federal Board of Revenue (FBR) can potentially boost revenue collection from the tobacco sector by more than $2 billion.

    “The potential revenue, if realized, could significantly contribute to human development projects and public health initiatives in Pakistan, addressing critical areas where the country lags in human development rankings,” she added.

    She said that anti-tobacco organizations have been misguiding the government by spreading misinformation about the revenue collection potential from the legitimate tobacco industry.

  • Pakistan Tobacco Firm Protests ‘Illegal’ Raid

    Pakistan Tobacco Firm Protests ‘Illegal’ Raid

    Photo: sezerozger

    Pakistan’s Walton Tobacco Co. has called on the Azad Jammu and Kashmir government to reopen the company’s offices, alleging that the company has been illegally sealed before Eid-ul-Fiter, the Muslims’ largest religious festival, reports Business Recorder. The closure has resulted in sudden unemployment for more than 400 employees.

    “We urge the authorities to immediately open the company and restore livelihoods of hundreds of workers,” said Arif Zia, spokesperson for the Walton Tobacco Co.

    “We are doing business and paying taxes for the last 18 years,” said Zia, adding that the company is the highest taxpayer in Kashmir. The company stated that it had been illegally raided, products had been seized, and they were threatened with serious consequences by the authorities.

    According to the manufacturer, authorities in Azad Jammu and Kashmir did not issue any “show cause” notices to the company or conduct income tax audits before suddenly sealing all the offices.

    “We will be forced to relocate businesses elsewhere if this trend continues,” the tobacco company said, noting that the government is conducting enforcement action as a show and that law enforcement has not taken any action against illegal cigarette sales.

    Law enforcement seized the company’s trucks during transportation rather than at excise check posts; the company is allegedly missing 200 trucks.

  • PTC Disputes Tax Underpayment Charge

    PTC Disputes Tax Underpayment Charge

    Image: alexlmx

    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.

  • Sindh Bans Shisha and E-cigs in Public

    Sindh Bans Shisha and E-cigs in Public

    Photo: GlobalReporter

    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.

  • Pakistan: Growers Want Control Of Tobacco

    Pakistan: Growers Want Control Of Tobacco

    Photo: Taco Tuinstra

    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.

  • Industry Sounds Alarm About Illicit Trade

    Industry Sounds Alarm About Illicit Trade

    Photo: Taco Tuinstra

    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.  

  • Khyber Pakhtunkhwa Bans Vapes

    Khyber Pakhtunkhwa Bans Vapes

    Photo: SakhanPhotography

    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.”