Illicit trade of cigarette: DGI&I IR holds out assurance

Director General Intelligence and Investigation Inland Revenue (IR) Federal Board of Revenue (FBR) Haroon Khan Tareen has assured the documented tobacco sector that the agency is taking appropriate steps through its intelligence network to curb illicit trade of cigarette.
This has been shared by DG Intelligence & Investigation, Inland Revenue, FBR during a detailed presentation arranged by Philip Morris (Pakistan) Ltd on illicit trade in cigarette industry here on Friday. DG I&I (IRS) and his team were briefed that according to International Tax and Investment Center and Oxford Economics report smuggling of cigarettes in Pakistan represents about 18 percent of the total illicit market. The rest is due to local manufactures that are not paying taxes. The agency's officials also noted that some local manufactures are selling their brands illegally below the minimum sale price of cigarettes per pack (42) set by the government under Federal Excise Act. Some are offering rebates and even cash-back through cigarette packs to attract customers, which is unlawful as per SRO 1086 of the Ministry of National Health Services, Regulation and Co-ordination.
DG I&I (IRS) emphasised on his commitment to reduce illicit and support the legal industry. He also praised his team in their efforts in curbing illicit trade and instructed them to continue to be vigilant against illicit trade of cigarettes which in turn will limit the loss of revenue to the government.
The company informed that huge revenue loss to the tune of billions is taking place per year due to illicit tobacco trade. The latest Asia-14 illicit indicator 2013, a report launched by International Tax and Investment Center and Oxford Economics, shows that illicit tobacco trade is on rise in Pakistan, which is rated fourth in the Asia region in illicit tobacco trade.
According to the report the share of Non-Domestic Illicit Consumption increased alarmingly by 14.8 percent, from 3.0 billion cigarettes in 2012 to 3.4 billion cigarettes in 2013. Domestic Illicit Consumption accounts for a significant proportion of total illicit consumption in 2013, contributing 82 percent to total illicit consumption of cigarettes that is causing huge economic loss to national exchequer. PMPKL in the light of International Tax and Investment Center and Oxford Economics report also illustrated in its presentation that the reducing profitability of the legal industry was due to lack of enforcement of the law resulting in the increase in the illicit market. Despite increase in government revenue over the years there is a loss of revenue for both the national exchequer and the legal industry. Today 1 in every 4 cigarettes in Pakistan is illicit, company added.