Islamabad, Pakistan, September 30, 2026: Fair Trade in Tobacco (FTT) has appreciated the Government of Pakistan and the Federal Board of Revenue for maintaining enforcement pressure against illegal cigarette manufacturing, smuggling, and tax evasion, while calling for these actions to become a permanent feature of tobacco-sector regulation rather than an occasional campaign.
Muhammad Amin, Chairman of Fair Trade in Tobacco Pakistan, said recent enforcement measures and parliamentary scrutiny demonstrate that the government increasingly recognizes the economic damage caused by the illegal cigarette trade.
“The Government of Pakistan and FBR deserve recognition for taking enforcement seriously. Illegal factories have been sealed, non-duty-paid stocks have been confiscated, supply chains have been disrupted, and cases are moving toward investigation and prosecution. This momentum must never be allowed to weaken,” Amin said.
He noted that the Senate Standing Committee on Interior and Narcotics Control, during its September proceedings, examined a subcommittee report estimating US$1 billion in annual revenue losses from tax evasion, illegal manufacturing, and trade malpractices in the tobacco sector. Amin said this assessment also raises serious questions about claims that cigarette-sector tax evasion amounts to only around Rs40 billion.
“The Rs40 billion figure simply does not correspond with the economics of Pakistan’s cigarette market,” he said. “Pakistan consumes around 80 billion cigarettes annually. Independent market assessments have estimated more than 43 billion of these cigarettes to be illegal, meaning that more than half of the market may be operating outside the documented tax system.”
He said FBR itself has previously estimated annual revenue losses from illegal cigarette manufacturing and trade at approximately Rs250 billion to Rs300 billion, while other economic assessments have placed the loss as high as Rs343 billion.
“Impartial and data-driven market-based assessments can indicate that the broader tax loss can approach Rs400 billion when the scale of illegal consumption, unpaid FED and sales tax, undocumented manufacturing and smuggling are taken into account. Whatever methodology is preferred, the problem is clearly measured in hundreds of billions of rupees, not Rs40 billion,” Amin said.
He argued that market dynamics offer a simple reason to be cautious about lower estimates. If approximately half of Pakistan’s cigarette market operates legally and contributes hundreds of billions of rupees in taxes, a similarly sized illegal market cannot reasonably be associated with only a small fraction of that amount in revenue loss.
FTT also welcomed recent action by enforcement and investigative agencies, including proceedings concerning the disappearance of 2,828 cigarette cartons valued at approximately Rs250 million from FBR custody. Amin said enforcement must cover the entire chain, from tobacco procurement and manufacturing to transportation, retail sales, storage of confiscated products and prosecution of offenders.
“Seizure alone is not enough. Enforcement must lead to investigation, prosecution and punishment under the law. Otherwise, illegal operators simply regroup and return to the market,” Amin said.
He called upon the federal government, FBR, Customs, provincial police forces and other relevant agencies to maintain year-round intelligence-based operations against illegal manufacturers, smugglers, distributors and retailers.
“The illegal cigarette mafia must never again be given the space to rebuild its market share. Enforcement should continue today, next year and for as long as necessary to ensure that tax evasion is no longer profitable,” Amin said.
“Pakistan can recover hundreds of billions of rupees by protecting the documented market, bringing illegal operators into the tax net and ensuring that those who deliberately violate the law are brought to justice.”