Prime Minister (PM) Shehbaz Sharif has directed the authorities concerned to take action against illegal cigarette factories after the International Monetary Fund (IMF) raised concerns over ‘tax evasion’ of Rs80 billion.
According to details, the prime minister issued the directives during a meeting after the Fund voiced concerns about the ‘tax evasion’ of Rs 80 billion through the sale of contraband cigarettes.
The Federal Board of Revenue (FBR) has been instructed by PM Shehbaz to finish the track and trace system on all the cigarette manufacturing companies.
A countrywide crackdown on illegal cigarette manufacturing will be initiated by FBR Inland Revenue Intelligence teams, and a report on the situation will be provided to the IMF.
According to additional information from sources, the track and trace system still does not include nearly 24 cigarette manufacturing organizations.
PM Shehbaz directs to curb smuggling, tax evasion in cigarette industry
The prime minister received a briefing on the illegal cigarette trade from the ministry of finance and FBR during the meeting. The Prime Minister’s Office has been ordered to receive the FBR’s monthly report on efforts to combat illicit cigarettes.
The federal government increased cigarette taxes earlier in February with immediate effect in order to raise Rs 115 billion out of the projected Rs 170 billion mini-budget.
The standard General Sales Tax (GST) rate was increased from 17 to 18 percent with effect from February 15, 2023, according to the FBR statement. Also increased was the Federal Excise Tax (FED) on cigarettes.
FED on expensive brands was increased by the government from Rs6.5 per cigarette to Rs16.5 a 153% increase. For less expensive brands, the increase in price per stick is 98% higher, from Rs2.55 to Rs5.05.