FBR launches campaign against smuggled, unlicensed cigarettes

Federal Board of Revenue (FBR) has launched a comprehensive campaign against smuggled and unlicensed cigarettes in a bid to save the annual loss of Rs 8 to 9 billion being caused by this menace to the national exchequer.
Sources in the Investigation & Intelligence and Inland Revenue (I&I IR) Division of the FBR told Business Recorder here on Monday that the Board had issued a warning to the wholesalers and retailers involved in selling the unlicensed or smuggled cigarettes across the country causing loss to the national exchequer and the industry both.
"We have started raiding the shops and godowns of persons involved in sale of smuggled or unlicensed cigarettes from Peshawar and confiscated about 29,000 cigarettes in this exercise,' sources added. The sources further stated that the Board is going to launch this move in all the cities of the country within next one or two days.
It may be mentioned here that the cigarette industry sources claim that one out of the five cigarettes sold in Pakistan is either manufactured or smuggled without paying the appropriate taxes, resulting in an estimated annual loss of Rs 8.5 billion to the national exchequer.
The cigarette industry is a main contributor to the government exchequer which is paying about Rs 50 billion on account of different taxes including Excise Tax, Sales Tax, and others. Tobacco industry is paying multiple taxes. The Federal Excise Duty (FED) is charged and collected on locally manufactured and imported cigarettes on the basis of retail price. For imported cigarettes, FED is applied at a maximum rate of 64 percent of the Retail Price. General Sales Tax is charged at a rate of 16 percent on retail price on imported and locally manufactured cigarettes.
A special ad valorem Excise Duty is also collected and levied at the rate of one percent on retail price less FED. The Excise and Sales Tax on cigarettes ranges from 64 percent to 81 percent. Thirty five percent ad valorem Customs Duty in addition to 15 percent Luxury Duty (50 percent) is levied on the imported finished tobacco products, industry sources claimed.
As many as 50 companies are registered in the country which are manufacturing 70 billion sticks of cigarette and thus contributing about Rs 50 billion to the government on account of different taxes while the illicit tobacco industry is producing 15 billion sticks and causing a loss of Rs 8.5 billion to the government, the sources concluded.