Pakistan's tobacco exporters urge competitive tax model, cite challenges for smaller firms
A delegation of leading tobacco exporters raised these concerns during a meeting with Federal Minister for Commerce Jam Kamal Khan on Monday, read a statement released by the commerce ministry on Tuesday.
During the meeting, exporters pointed out that the current tax structure—which includes a Federal Excise Duty (FED) of Rs390 per kg, Provincial Excise Duty (PED) of Rs50 per kg, Federal Tobacco Cess of Rs15.15 per kg, and a Provincial Development Cess of Rs25 per kg—totals Rs480.15 per kg.
'They said this cost poses a challenge, particularly for smaller exporters and suggested that a more competitive taxation model would help enhance Pakistan's position in the global tobacco market,' read the statement.
The exporters emphasised that tobacco, like other agricultural commodities such as sugarcane, cotton, and citrus, should be supported through market-based policies. They noted that annual price adjustments are mandatory under current regulations, which can affect competitiveness in export destinations.
Kamal acknowledged the concerns and reiterated the government's commitment to balanced and growth-oriented policies.
He remarked that optimal revenue generation comes not only from taxation but also from industrial expansion and boosting exports.
Tobacco revenue can increase by bringing illicit trade into tax net
Kamal noted that similar concerns have been raised by other sectors, such as beverages, regarding the impact of high taxation on consumer demand and revenue collection.
The tobacco exporters also called for the revival of the Pakistan Tobacco Board (PTB) to support coordinated efforts in export promotion and policy facilitation. In response, Kamal proposed the establishment of a Sectoral Council for Tobacco, similar to other existing sectoral councils, to provide a structured platform for industry dialogue and representation.
The minister further informed the delegation that a revenue policy committee has been made independent of the revenue collection mechanism—an important step toward more informed and consultative policymaking.
Meanwhile, exporters appreciated the government's ongoing efforts to promote trade and highlighted the significant contribution of the tobacco industry to employment, rural development, and export earnings. They shared that with targeted facilitation, tobacco exports have the potential to increase substantially, supporting national revenue goals.
Exporters appreciated Kamal and expressed confidence that with continued government support, the industry could significantly increase its export footprint, read the statement.
Pakistan's tobacco exports reached $158.35 million in the current fiscal year (July–April), with promising growth in markets such as Belgium, UAE, Greece, and the Philippines.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
39 minutes ago
- Express Tribune
Tobacco exports likely to fetch $150m this year
Listen to article Pakistan Tobacco Company (PTC) expects export potential of over $150 million for tobacco products during the ongoing financial year 2025-26. "Tobacco is called a cash crop and directly impacts more than $65 million in economic activity. Our commitment to farmers goes beyond procurement – we invest in their training, ensure guaranteed purchase of quality leaf and create a sustainable livelihood model," PTC Head of Leaf Imaduddin said while briefing journalists. He said that total demand from all tobacco companies was around 81.5 million kilogrammes this year, of which PTC had a 25% share. However, the total crop production is nearly 140 million kg. In case of surplus production, the Pakistan Tobacco Board ensures proportional allocation to companies, safeguarding farmer interests. Imaduddin revealed that PTC has direct contracts with more than 10,000 farmers and through almost 150 technical experts, it provides technical training and agronomic support from seed sowing to harvest, ensuring responsible sourcing and quality enhancement. It also offers financial assistance to farmers in terms of loans. Recently, PTC provided financial assistance of over Rs1 billion to tobacco farmers. PTC clarified that the advance federal excise duty (FED), set at Rs390 per kg, was borne entirely by manufacturers and it did not affect farmers. "
Business Recorder
an hour ago
- Business Recorder
PTC vows to ensure transparency in tobacco leaf buying process
ISLAMABAD: The Pakistan Tobacco Company Limited (PTC) has reiterated its commitment to supporting farmers, ensuring transparency in the tobacco leaf buying process, and strengthening the fight against illicit trade through robust compliance with regulatory frameworks. While briefing journalists during visit to tobacco leaf buying areas on Wednesday, Head of Leaf PTC, Imad Uddin told that the tobacco industry is operating under the oversight of the Pakistan Tobacco Board (PTB) and the industry is regulated by the PTB Ordinance, 1968, which governs production targets, procurement quotas, and fair market practices. As per the MLO 487, every year, the PTB allocates tobacco buying quotas to manufacturers based on their declared requirements, which are publicly notified to ensure transparency. This year the total demand from all the tobacco companies was around 81.5 million kilograms with 25 percent share of the Pakistan tobacco company. However, the total crop production is nearly 140 million kilograms. In case of surplus production, the PTB ensures proportional allocation among companies, safeguarding farmer interests. The MLO 487, or Martial Law Order 487, is a tobacco marketing law in Pakistan that regulates the purchase of tobacco by companies from growers. It requires companies to purchase surplus tobacco at or above the set Minimum Indicative Prices (MIP). This law is part of a broader framework including the Pakistan Tobacco Board (PTB) Ordinance, 1968 and the Tobacco Marketing Control Rules, 2016. Imad Uddin further informed that, Pakistan Tobacco Company directly contracts with more than 10,000 farmers, and through almost 150 technical experts, provides technical training and agronomic support from seed sowing to harvest, ensuring responsible sourcing and quality enhancement. The PTC also provides financial assistance to farmers in terms of loans. Recently the PTC provided more than one billion rupees in terms of financial assistance to tobacco farmers in the region. Under this model, contracted farmers receive priority during buying, guaranteeing income security and promoting compliance with both local and international standards. 'Tobacco is called as a cash crop and directly manage more than US$ 65million economic activity and our commitment to farmers goes beyond procurement—we invest in their training, ensure guaranteed purchase of quality leaf, and create a sustainable livelihood model. Farmers remain at the heart of our business, Imad further stated. Addressing misconceptions around the Advance Federal Excise Duty (FED) imposed by the federal government at Green Leaf Threshing (GLT) units, the PTC clarified that this levy, currently set at PKR 390 per kilogram, is borne entirely by manufacturers and does not affect farmers in any way. 'The narrative that the advance FED hurts farmers is misleading and deliberately propagated by illicit trade operators to undermine tax enforcement,' the PTC official added. 'Farmers sell their green leaf to manufacturers; any tax applied after this point is strictly the manufacturer's responsibility.' There are only around 13 GLTs in Pakistan, all fully traceable, making them the most logical taxation choke point. In contrast, there are over 450,000 retail outlets selling cigarettes and more than 50 cigarette factories – primarily in Khyber Pakhtunkhwa (KPK) and Azad Jammu & Kashmir (AJK) – where enforcement at post-processing levels is far more challenging. The FED at GLTs, fully traceable processing units—is a key tax enforcement mechanism designed to curb revenue leakage and illicit cigarette manufacturing. By documenting actual volumes processed by manufacturers, the system ensures declared production aligns with tax liabilities, strengthening the national economy. Unprecedented excise increase in recent years on the legitimate cigarette manufacturing companies and too low advance FED in previous years has led to the illicit sector to grow to more than 56% of the market. This increase has been fueled by smuggled cigarette brands. FBR needs to analyze how much tobacco was processed at GLTs and how much adjustable FED was collected from cigarette manufacturers and how much of this adjustable FED was actually adjusted against the final liability. FBR also needs to check how the GLT processing corresponds with the leaf buying of these manufacturers. The PTC remains fully compliant with the laws and regulation relevant to tobacco industry, aligning its operations with PTB directives and global best practices. 'Maintaining a fair and transparent supply chain is essential for Pakistan's economic stability. The advance FED is a crucial tool to protect government revenue and discourage tax evasion, which ultimately benefits legitimate farmers and the wider economy.' Copyright Business Recorder, 2025
Business Recorder
an hour ago
- Business Recorder
Gold prices fall on US-Japan trade deal
NEW YORK: Gold prices fell on Wednesday after a US-Japan trade deal eased market uncertainty, while strong industrial demand and a supply shortage drove silver to its highest level since September 2011. Spot gold was down 0.6% at $3,412.03 per ounce, as of 1351 GMT, after hitting its highest point since June 16 earlier in the session. US gold futures also slipped 0.7% to $3,421.50. 'Trade deals like the one between the US and Japan mitigate macroeconomic concerns and may dampen safe haven demand. This could lead to a continuation of the recent push and pull in (gold) prices,' said Nikos Tzabouras, senior market analyst at US President Donald Trump struck a trade deal with Japan on Wednesday that lowers auto tariffs, marking the most significant agreement his administration has negotiated since announcing the tariffs in April. However, the longer-term prospects for gold remain favourable, Tzabouras added. 'Dollar weakness could persist amid mounting concerns over the Fed's independence and worries over the US debt. This could exacerbate the dedollarisation trends and lead to higher gold holdings by central banks.' Bullion tends to thrive in periods of uncertainty and also in low-interest-rate environments because the opportunity cost of holding a non-yielding asset is reduced. The markets do not expect an interest rate cut from the US Federal Reserve in July, but the Fed's independence appears under threat from mounting political interference, according to a clear majority of economists polled by Reuters. Among other metals, spot silver rose 0.2% to $39.35 per ounce, a near 14-year peak. 'The recent rally in silver is being driven by a combination of strong industrial demand, persistent supply deficits, and increased investor interest,' said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany. 'A decisive push past $40 could come from a further breakout in gold prices, renewed weakness in the US dollar, or signs of deeper supply tightness – especially if physical premiums start to rise again in key Asian markets.' Platinum fell 1.4% to $1,420.92 and palladium was down 0.4% at $1,269.60.—Reuters
