The Federal Board of Revenue (FBR) has discovered a major scandal in Pakistan’s tobacco sector, exposing the alleged repackaging of expired, smuggled cigarettes of internationally known foreign brands under the cover of Export Processing Zone (EPZ) incentives.
Sources told ProPakistani that the scheme may have cost the national exchequer billions of rupees while flooding local markets with expired and potentially hazardous products.
According to industry estimates, the share of smuggled cigarettes in Pakistan rose to 11 percent of the total cigarette market in 2025 alone, resulting in annual losses of billions of rupees in tax revenues due to evasion.
The controversy erupted after enforcement teams of FBR conducted a high-profile raid at M/s Pioneer Tobacco & Trading Company located in the Export Processing Zone, Karachi.
What officials reportedly uncovered during the operation has raised serious concerns across regulatory, public health, and fiscal circles.
Authorities confiscated approximately 4.5 million sticks of smuggled foreign cigarettes, including brands such as Marlboro, Camel, Benson & Hedges Nero (Blue and Red), and Cleopatra, among others. Large quantities of cigarette filters, acetate tow, cigarette paper, and expired sheesha flavors of various brands were also seized.
Sources allege that expired or near-expiry cigarette stocks are purchased at extremely low prices from international black markets and then smuggled into Pakistan. Such products, often rejected by authorized distributors due to shelf-life concerns, can be acquired in bulk at a fraction of their original value.
According to industry sources, the typical shelf life of cigarettes ranges from three to six months, depending on storage conditions. Beyond this period, tobacco dries out, becomes stale, loses flavor integrity, and undergoes chemical degradation, which may lead to mold formation, rendering the product unfit for human consumption.
Authorities suspect that these expired or deteriorated cigarette stocks were repackaged, relabeled, and prepared for redistribution, allegedly concealing original manufacturing details and production dates.
When contacted, representatives of Pakistan Tobacco Company, the owner of the Benson & Hedges brand, and Philip Morris International, owner of the Marlboro brand, confirmed that such activity is illegal. They stated that M/s Pioneer Tobacco & Trading Company does not have authorization from the brand owners to import, manufacture, or export their products.
At the center of the controversy is the alleged misuse of Export Processing Zone incentives. Under various SROs issued in 1980, 1981, 1982, and 2021, goods imported into and exported from EPZs are exempt from customs duties and sales tax. These incentives were designed to promote exports and attract investment. However, experts believe the exemption framework may have been exploited to import expired cigarette stocks, repack them within EPZ premises, and divert them into domestic markets—an apparent violation of EPZ regulations.
According to Volza’s global trade data, the same tobacco business group has also exported consignments to several underdeveloped markets, including Ghana, Colombia, Vietnam, and Syria, where regulatory oversight is comparatively weak. Sources stress the need to examine the scale of alleged illegal repackaging activities across all factories operated by this business family. Meanwhile, significant quantities are believed to have been diverted into Pakistan’s local market, bypassing excise duties and sales tax.
Investigations into corporate records indicate an interconnected network of tobacco-related entities. M/s Pioneer Tobacco & Trading Company is reportedly owned by a Karachi-based business family.
Muhammad Arif and Muhammad Akif are said to hold ownership stakes or operational control in several tobacco enterprises, including M/s GB Global, M/s Eastern Industries (Pvt.) Limited, M/s Golden Cigarette Factory, Hub Tobacco Lasbela, and M/s Marsons Group.
Marsons Group is reportedly involved in trading new, used, and refurbished cigarette manufacturing, packing, and filter-production machinery, potentially enabling large-scale manufacturing and repackaging operations.
Sources allege that Pioneer Tobacco’s core operations include the repackaging of expired foreign cigarette brands imported under EPZ facilities, in coordination with GB Global and Hub Tobacco. Meanwhile, the production of local cigarette brands such as Nine, Master, Liston, AA Gold, Pioneer, and Rocco is reportedly carried out by Eastern Industries (Pvt.) Limited.
Following the FBR raid on Pioneer Tobacco & Trading Company, M/s GB Global—owned by the same business group—approached the court of the Senior Civil Judge, Malir, Karachi, and obtained a stay order restraining FBR officials from conducting raids on its premises, adding a legal twist to the unfolding case.
Repackaging and selling expired cigarettes is illegal in most jurisdictions. Tobacco products are legally required to carry mandatory graphical and textual health warnings, tax stamps, banderols, and manufacturer markings. Removing or altering original packaging breaks the compliance chain, rendering the product illicit and non-tax-paid. Unauthorized repackaging also raises intellectual property concerns and may lead to civil litigation. Concealing or tampering with expiry dates constitutes fraud and consumer deception.
Pakistan already suffers significant losses due to smuggled and non-tax-paid cigarettes. The alleged exploitation of EPZ incentives further deepens the underground economy. Additionally, exporting repackaged expired products to vulnerable foreign markets could damage Pakistan’s trade reputation.
Beyond fiscal losses, the scandal carries serious public health implications. While tobacco use is inherently harmful, deterioration caused by expiration and improper storage may increase exposure to toxic byproducts, compounding health risks.
Following strict instructions from Shehbaz Sharif, the Federal Board of Revenue has intensified its crackdown on tax evasion in the tobacco sector, signaling that enforcement actions will continue despite legal challenges.
The alleged repackaging of expired, smuggled cigarette stocks has raised broader questions about regulatory oversight within Export Processing Zones and whether long-standing incentive regimes are being exploited at the cost of public health, lawful trade, and the national economy.
