PTC and Philip Morris should also be investigated if tax was evaded in the tobacco sector, Senator Saifullah Abro told a Senate sub-committee on interior affairs, as the panel kept pressing the FBR for tax records it says it has still not received.
PTC and Philip Morris: what Senator Abro said
The sub-committee, part of the Senate Standing Committee on Interior and Narcotics Control, met in August under convener Abro. He pointed out that Pakistan Tobacco Company (PTC) and Philip Morris Pakistan (PMI) are the two biggest importers of raw material for cigarettes. If tax has been evaded at the scale being discussed, he said, the two companies should be looked at as well.
The remark was conditional. It is not a finding, and in the committee record reviewed for this story no company has been accused, fined or served a notice over tobacco tax.
Why the two companies are in focus
The 94 percent figure in this debate comes from a briefing which said PTC and Philip Morris together account for about 94 percent of the imported raw material used by the tobacco industry, with local companies making up the remaining 6 percent. It describes their share of imports, not an amount of tax evaded.
The briefing put acetate tow imports at about 20,002 tonnes, 97 percent of it brought in by two companies. Tobacco paper imports were about 15,639 tonnes, of which PTC imported roughly 10,840 and Philip Morris roughly 3,118. Filter rods came to about 533 tonnes, 96 percent by two companies. PTC falls under the Large Taxpayers Unit (LTU) Islamabad and Philip Morris under LTU Karachi, and the panel asked the relevant offices for full tax and import details on both.
FBR says the law bars sharing taxpayer data
The data fight began in June. On 29 June the panel asked the FBR for evidence of pending tobacco taxes, a full list of tobacco companies and brands, details of imported raw material, and 20 years of revenue records. The FBR did not provide them, and its chief of sales tax was asked to leave the meeting.
In August the panel asked again for the tax data of PTC and Philip Morris, along with production details, brand names, tax paid and advertising details for all cigarette manufacturers. An FBR member told the committee the law does not allow the board to disclose that kind of information. The panel also issued a show-cause notice to LTU Karachi for not attending the meeting.
How big is the tax gap?
The numbers are disputed. Government awareness advertisements have claimed tobacco tax theft of about $1 billion a year, roughly Rs280 billion. FBR officials told the panel in June that their own estimate is closer to Rs40 billion a year and that they were unaware of the campaign. Abro called the gap alarming and asked that the advertisements be corrected. Customs had earlier reported tobacco-related taxes of Rs75 billion, and later discussion suggested about Rs40 billion remained outstanding.
Rs1,120 billion certificates and 108 firms
In mid-August the panel reviewed consumption certificates worth Rs1,120 billion, linked to tax-exempt raw material that entered the erstwhile FATA and PATA between 2018 and 2026. It directed the FIA to issue notices to 108 companies and make them submit the same documents they had given the FBR. The FIA was asked to complete its inquiry within two months.
The cigarette theft case
A separate case involves 2,828 cartons of seized cigarettes stolen from FBR warehouses in Swabi and Mardan. In April the panel told the FIA to widen its investigation and record the statements of the officers who held key posts at the time. In September senators objected that the FIR named lower-ranking staff and transport drivers while people identified in early inquiries were left out. They also pointed to missing CCTV footage, absent inventory ledgers and unverified handovers of confiscated goods at the warehouses.
What happens next
The FBR and FIA were told in September to submit comprehensive inquiry reports within one month, and to present verified physical stock registers for seized goods. The FIA is expected to issue its notices and continue the inquiry, and the FBR still has to supply the records the panel has asked for.
Neither PTC nor Philip Morris Pakistan has been accused of wrongdoing in the committee record reviewed here, and no response from either company has been reported.
