FBR Chairman Supports Massive Increase in Excise Duty on Cigarettes

Chairman Federal Board of Revenue (FBR) Asim Ahmed said Wednesday that the government has made a historic increase in the Federal Excise Duty (FED) on cigarette brands of multinational companies as compared to a raise in the FED rates on brands manufactured by local companies.

During the meeting of the Senate Standing Committee on Finance on Wednesday, FBR Chairman was responding to a query about the steps taken for the protection of the local tobacco industry against the multinational companies in the country.

In the case of cigarette brands of multinational companies, locally produced cigarettes if their on-pack printed retail price exceeds Rs. 9,000 per 1,000 cigarettes, the rate of the federal excise duty would be Rs. 16,500 per thousand cigarettes.

However, the FED on brands of local companies, the locally produced cigarettes if their on-pack printed retail price does not exceed Rs. 9,000 per thousand cigarettes, the rate of the FED would be Rs. 5,050 per thousand cigarettes, he said.

According to him, the FBR and tax authorities of Azad Jammu and Kashmir have signed an agreement on the exchange of information. The units shifted to the AJK territory to avoid taxes. The AJK government has decided to implement the track and trace system at the manufacturing units operating from the AJK. This is a very important development and achievement of the FBR.

FBR Chairman stated that after the implementation of the track and trace system on three leading cigarette manufacturing companies, 1-2 more companies have signed an agreement with the FBR for the installation of the system.

The matter was in litigation at the Islamabad High Court (IHC) and judgment has been reserved. It is a breakthrough that the stay has been vacated and now the remaining companies would install the track and trace system at their manufacturing premises.

Sharing the anti-smuggling efforts, FBR Chairman said that the FBR has done 811 seizures in which 61 million sticks of cigarettes were seized.

The taxation structure on cigarettes is still the lowest in the region. The World Health Organization (WHO) has recommended indirect taxation of 75 percent of the retail price of tobacco. On an average basis, we have still not reached the level of taxation desired by the WHO, Asim Ahmed added.

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