ISLAMABAD: Illicit tobacco trade is on the rise in Pakistan, inflicting a loss of around Rs26 billion to the exchequer.

The Asia-14 illicit indicator report, launched by International Tax and Investment Centre and Oxford Economics, rates Pakistan fourth in Asia in illicit tobacco trade.

According to the report, the share of non-domestic illicit consumption increased by 14.8 per cent from three billion cigarettes in 2012 to 3.4 billion cigarettes in 2013.

On the other hand, ‘domestic illicit consumption’ was 82 per cent of the total illicit consumption of cigarettes.

Based on the findings of the report, Morris Pakistan Limited (PMPKL) has written to the Federal Board of Revenue (FBR) that lack of enforcement of the law was resulting in increase in illicit market.

The PMPKL has said the growing share of foreign and domestic illicit cigarettes was also reducing profitability of the legal industry.

The International Tax and Investment Centre and Oxford Economics report has highlighted that smuggling of cigarettes in Pakistan represents about 18 per cent of the total illicit market.

“The rest is due to local manufacturers that are not paying taxes, neither do they observe the international quality standards,” the PMPKL presentation to FBR said.

It has even been noted that some local manufacturers were selling their brands illegally below the minimum sale price of cigarettes per pack as set by the government in Federal Excise Act.

Published in Dawn January 31st, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play