ISLAMABAD: Amid concerns and misconceptions regarding the tax imposed on tobacco exports, tax experts have clarified that the Federal Board of Revenue’s (FBR) advance adjustable tax of Rs390 per kilogram on tobacco processed at Green Leaf Threshing (GLT) units does not apply to tobacco growers and places no financial burden on farmers.
According to tax experts here on Friday, the levy is imposed solely on companies involved in purchasing, processing, exporting tobacco, or manufacturing cigarettes. They explained that the tax is an advance adjustable tax that can subsequently be adjusted or claimed by the relevant exporting or cigarette manufacturing companies through their tax returns filed with the FBR.
Experts noted that the primary objective of the tax is to promote documentation and transparency within the tobacco sector by ensuring that business transactions and production activities are properly recorded.
They emphasised that tobacco farmers are neither required to pay this tax nor legally responsible for it in any form.
Tax specialists further stated that, to date, no local tobacco exporting company has claimed adjustment or refund of this tax. According to them, one of the key reasons is that companies seeking tax adjustments or refunds are required to provide the FBR with comprehensive records of their exports, tax liabilities, and taxes already paid, enabling detailed scrutiny of their financial affairs.
The experts questioned the rationale behind objections to the levy, arguing that since the tax is paid by exporters and cigarette manufacturers and is subsequently adjustable through the legal tax mechanism, there is limited justification for opposing it.
Copyright Business Recorder, 2026
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