Philip Morris fixes brand prices less than FBR’ FED rate

Company accused of possible evasion of FED and sales tax.

ISLAMABAD: A multinational Tobacco company Philip Morris Pakistan Limited has reportedly fixed the retail price of one of its brands less than Federal Board of Revenue (FBR) Rs330 fixed rate of Federal Excise Duty (FED) of Tier-1.

According to PMI, the retail price of Marlboro Advance will be Rs326.27, Royals Rs118.64 and Marlboro Gold Rs409.32 per 20HM packing and these prices apart from Sales tax will be applicable from June 10, 2023 pursuant to clause 3 (III) of the Federal Excise General Order no 3/2007.

Sources said that the advertised retail price is allegedly in violation of the minimum FED as defined under the law, and in addition to that the cost of production is not added to the retail price.

This resultantly leads not only to alleged evasion of FED but also the sales tax as higher retail price attracts higher sales tax at the rate of 18 percent.

According to Federal Excise Act 2005, a person who sells cigarettes in retail at a price lower than the retail price plus the amount of sales tax as shall be guilty of an offence and for every such offence shall be liable to fine which may extend to twenty thousand rupees and in case of offence under clause (b), the fine may extend to one hundred thousand rupees and he shall be punishable with imprisonment for a term which may extend to five years or with both.

According to company’ Spokesperson, the retail price of Marlboro Advance has been set in compliance with the provisions of the Federal Excise Act. 

Excise duty is paid by the company at the rates specified under serial number 9 in the First Schedule of the Federal Excise Act and determined by the crossover between two excise rates as mentioned in the Federal Excise Act. 

Furthermore, as per Federal Excise General Order 3 of 2003, necessary approvals are obtained from the tax authority to clear stock with old printed price and revised prices are published in local newspapers mentioning Retail Price (excl. Sales tax), Sales tax and Total printed pack Price.

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