In a bid to enhance revenue from the tobacco sector, the Pakistani government has increased the adjustable federal excise duty (FED) on unmanufactured tobacco from PKR 10 (USD 0.04) per kg to PKR 390 (USD 1.63) per kg, applicable at the Green Leaf Threshing (GLT) stage, reports ProPakistani.

According to the report, the adjustable excise is applicable to and payable by the cigarette manufacturers. Pakistan Tobacco Company officials told reporters that the adjustable excise tax does not apply to farmers, but to cigarette manufacturers at the GLT stage.
The aim of this measure is not only to improve tobacco industry documentation and curb illicit trade, but also to increase the cost of evasion by illegal cigarette manufacturers.
The excise duty is adjustable at the time of filing of returns by the manufacturer. As for export, the rebate may be claimed at the export stage, and for manufacturers; it may be adjusted at the time of filing the manufacturer’s tax returns, the report said.
Currently, there are approximately 13 GLTs in Pakistan, where more than 40 cigarette manufacturers are operating. In terms of enforcement, it is administratively more efficient to monitor 13 GLTs than to deploy enforcement officials to over 40 cigarette manufacturers or hundreds of thousands of retail outlets. The government has been urged to strictly enforce the application of the adjustable excise tax on unprocessed tobacco and the implementation of the track and trace scheme to curb illicit trade and provide a level playing field for legitimate industry players.
According to the report, the adjustable excise duty will help document the cigarette business in Pakistan, which will not only increase government revenues but will also help curb tax evasion. The government loses approximately PKR 80 billion in terms of revenue from illicit trade in cigarettes.