The report was presented to the media by Nick Hudsman, Global Head of Anti-Illicit Trade at British American Tobacco
ISLAMABAD ( WEB NEWS )
A major scandal has been uncovered in Pakistan regarding the smuggling of acetate tow material in the illegal cigarette industry. According to research by the international firm Alvarez & Marsal (A&M), there is a clear discrepancy between the import of acetate tow and the actual cigarette production, resulting in billions of rupees in annual revenue losses to the government. The report was presented to the media by Nick Hudsman, Global Head of Anti-Illicit Trade at British American Tobacco (BAT).
The study revealed that in 2023, enough acetate tow was imported to produce 60–80 billion cigarettes. Out of this, only 39 billion cigarettes were manufactured by legal producers, of which 2 billion were exported and therefore not subject to tax. On the other hand, approximately 41 billion cigarettes were produced illegally, on which no duty or tax was paid.
According to the Federal Board of Revenue (FBR) data on Federal Excise Duty (FED) and General Sales Tax (GST), duty was collected on only 37 billion cigarettes, clearly indicating that a huge amount of revenue never reached the national exchequer.
Nick Hudsman stated: “Acetate tow is a transparent way to understand actual cigarette production capacity, and these figures show a significant discrepancy between the declared amount and real production.”
In the fiscal year 2024–25, the government imposed an advance excise duty of Rs. 44,000 per kilogram on acetate tow imports to ensure transparency. However, due to weak enforcement, smuggling and misreporting in imports of this raw material have increased. In 2023, 2.36 kilotons of acetate tow were recorded, which fell to only 0.145 kilotons this year. Despite this decline, the availability of local illegal cigarette brands has not reduced, partly due to raw material smuggling.
Recent FBR operations seized large quantities of acetate tow at the Sost (China border) and Torkham (Afghanistan border), pointing to new smuggling routes. Experts have warned that if the government fails to control smuggling at Sost and Torkham and does not make import records transparent, the consumption of illegal cigarettes will further increase, causing not only a loss to the national treasury but also severe harm to legitimate businesses and the economy.