ISLAMABAD: The Federal Board of Revenue (FBR) has taken action against a well-known cigarette manufacturer, Philip Morris (Pakistan) Limited (PMPKL), allegedly for violating tax regulations.
The operation was triggered when it was discovered that the company had been allegedly distributing cigarettes below the minimum retail price, contravening tax laws.
Under Pakistan’s stringent regulations to control tobacco use, the government has enforced high taxation on tobacco products to discourage smoking.
According to officials at FBR , approximately 650 cartons of cigarettes were confiscated by the FBR in this enforcement action, accompanied by a thorough investigation. The operation was carried out in accordance with the Federal Excise Act, 2005, particularly Section 19, which explicitly prohibits selling cigarettes below the set retail price, which is what PMPKL is accused of doing. In addition to confiscation, the Act empowers authorities to impose fines and penalties on violators.
The location of the raid remains a mystery. Officials from FBR claim that the raid took place in Karachi and the FBR arm of Karachi conducted it. The spokesperson from Philip Morris however denied that the raid took place in Karachi, claiming that the operation in question was conducted in Sahiwal, Punjab, which would fall under the jurisdiction of FBR Punjab.
“This action underscores the government’s commitment to upholding tax laws and safeguarding public health. Violations of these regulations not only undermine public health initiatives but also lead to revenue losses for the government”, explained an FBR official while talking to Profit.
A spokesperson from Philip Morris responded to the situation, asserting that the company is fully compliant with tax obligations for all its brands, including Marlboro Advance. The spokesperson highlighted that the company is cooperating with the FBR and is dedicated to tackling illicit trade in Pakistan, which poses a significant challenge due to the proliferation of untaxed cigarettes.
clear case of tax avoidance.