Pakistan’s tobacco exporters urge competitive tax model, cite challenges for smaller firms

Pakistan tobacco exporters have warned that the current tax structure ‘poses a challenge’, especially for smaller players, and urged the government to adopt a more competitive taxation model.

A delegation of leading tobacco exporters raised these concerns during a meeting with Federal Minister for Commerce Jam Kamal Khan on Monday, read a statement released by the commerce ministry on Tuesday.

During the meeting, exporters pointed out that the current tax structure—which includes a Federal Excise Duty (FED) of Rs390 per kg, Provincial Excise Duty (PED) of Rs50 per kg, Federal Tobacco Cess of Rs15.15 per kg, and a Provincial Development Cess of Rs25 per kg—totals Rs480.15 per kg.

“They said this cost poses a challenge, particularly for smaller exporters and suggested that a more competitive taxation model would help enhance Pakistan’s position in the global tobacco market,” read the statement.

The exporters emphasised that tobacco, like other agricultural commodities such as sugarcane, cotton, and citrus, should be supported through market-based policies. They noted that annual price adjustments are mandatory under current regulations, which can affect competitiveness in export destinations.

Kamal acknowledged the concerns and reiterated the government’s commitment to balanced and growth-oriented policies.

He remarked that optimal revenue generation comes not only from taxation but also from industrial expansion and boosting exports.

Tobacco revenue can increase by bringing illicit trade into tax net

Kamal noted that similar concerns have been raised by other sectors, such as beverages, regarding the impact of high taxation on consumer demand and revenue collection.

The tobacco exporters also called for the revival of the Pakistan Tobacco Board (PTB) to support coordinated efforts in export promotion and policy facilitation. In response, Kamal proposed the establishment of a Sectoral Council for Tobacco, similar to other existing sectoral councils, to provide a structured platform for industry dialogue and representation.

The minister further informed the delegation that a revenue policy committee has been made independent of the revenue collection mechanism—an important step toward more informed and consultative policymaking.

Meanwhile, exporters appreciated the government’s ongoing efforts to promote trade and highlighted the significant contribution of the tobacco industry to employment, rural development, and export earnings. They shared that with targeted facilitation, tobacco exports have the potential to increase substantially, supporting national revenue goals.

Exporters appreciated Kamal and expressed confidence that with continued government support, the industry could significantly increase its export footprint, read the statement.

Pakistan’s tobacco exports reached $158.35 million in the current fiscal year (July–April), with promising growth in markets such as Belgium, UAE, Greece, and the Philippines.