Islamabad, Pakistan, July 29, 2026: Fair Trade in Tobacco has welcomed the substantial increase in tax revenue generated by Pakistan’s documented tobacco sector, describing it as evidence that consistent enforcement against illegal cigarettes can protect national revenue and create fairer market conditions for tax-paying businesses.
Muhammad Amin, Chairman of Fair Trade in Tobacco, Pakistan, said the legal tobacco industry had added approximately Rs. 41 billion to the national exchequer within one financial year. He said this increase reflected both the contribution of compliant companies and the impact of enforcement measures undertaken by the Government of Pakistan and the Federal Board of Revenue under the leadership and directions of the prime minister.
“The increase in revenue sends a clear message. When the government acts against illegal cigarette manufacturing, smuggling and the sale of unstamped products, documented businesses regain some operating space, and Pakistan collects more taxes,” Amin said.
According to recently reported figures, FBR collected Rs. 357 billion in FED, GST and income tax from the tobacco sector during fiscal year 2025–26, compared with Rs. 315 billion during the previous year. FED and GST collections alone increased from Rs. 284 billion to Rs. 329 billion.
Pakistan Tobacco Company remained the largest tax contributor, depositing Rs. 260.7 billion during fiscal year 2025–26, compared with Rs. 222 billion in the preceding year. Philip Morris Pakistan reportedly contributed approximately Rs. 52.2 billion.
“These figures show that the legal tobacco sector is not avoiding its national responsibility. It is registered, documented, monitored and taxed. Its contribution rises when the government prevents illegal operators from taking over the market through tax evasion,” Amin said. He appreciated the deployment of enforcement personnel at Green Leaf Threshing Units, stronger implementation of advance tax requirements, action against undeclared production, and provincial police operations against cigarette packs carrying no tax stamps.
Amin said the government’s enforcement actions in Khyber Pakhtunkhwa were particularly important because much of Pakistan’s illegal cigarette manufacturing and tobacco diversion is concentrated in the province. “The government and FBR have taken difficult but necessary steps against a powerful and deeply established illegal cigarette mafia. These actions have created somewhat fairer market conditions, but the work is far from complete,” he said. Fair Trade in Tobacco expressed concern that illegal and smuggled cigarettes still account for a large part of the national market and continue to cause an estimated annual revenue loss of approximately Rs. 400 billion.
Amin added that the reported presence of Afghan-linked cigarette supply networks required serious investigation. Public reports have carried allegations that the widely smuggled Milano and Mond cigarette brands are connected with Gulbahar Tobacco Company, reportedly associated with the Habibi family of Jalalabad, Afghanistan. “These allegations must be investigated by the relevant Pakistani authorities. No foreign-linked business network should be permitted to use local facilitators, smuggling corridors or undocumented distribution systems to damage Pakistan’s legal industry and steal its tax revenue,” he said.
He cautioned that large undocumented financial flows associated with cross-border cigarette smuggling could create risks extending beyond tax evasion.
“When billions of rupees circulate through undocumented networks, the government must examine where the money originates, where it travels and who ultimately benefits from it. Such financial flows can damage Pakistan’s economy and may also create risks for national security,” Amin said. He emphasized that no allegation should be treated as proven without investigation. Still, the scale of smuggling and the availability of foreign cigarette brands in Pakistan justified immediate financial, criminal and regulatory scrutiny.
Fair Trade in Tobacco called upon the government to continue enforcement without interruption and resist pressure from groups seeking further tax increases on the documented sector while ignoring the illegal market. “Pakistan will not achieve its revenue potential by repeatedly taxing those who already pay. The larger opportunity lies in bringing illegal manufacturers, distributors and sellers into the tax system,” Amin said.
He added that enforcement should be strengthened at tobacco-processing facilities, manufacturing units, transport routes, warehouses and retail outlets. Provincial governments should work closely with FBR to remove unstamped cigarette packs from the market and take action against retailers selling non-duty-paid products. The reported estimates suggest that stronger enforcement could raise total tobacco-sector revenue to between Rs. 575 billion and Rs. 600 billion in future years. “The Rs. 41 billion increase demonstrates what is possible. The government should build upon this progress, protect tax-compliant businesses and relentlessly pursue the illegal cigarette mafia. A level playing field will strengthen the legal economy, expand national revenue and protect Pakistan’s economic interests,” Amin concluded.