Pakistan is witnessing a surge in acetate tow smuggling the key raw material used to make cigarettes raising alarms over lost government revenue and a booming illicit trade.
Recent seizures by the Federal Board of Revenue (FBR) at Sost (China border) and Torkham (Afghanistan border) revealed how new smuggling routes are being exploited. Experts warn the trend worsened after the government imposed a Federal Excise Duty (FED) of Rs44,000 per kg on acetate tow in FY 2024/25.
Instead of curbing tax evasion, weak enforcement has pushed importers to misdeclare shipments or rely on smugglers.
The Numbers Tell the Story:
2023 imports: 2.36 kilotons of acetate tow
2024/25 imports: just 0.145 kilotons (a 94% drop)
Yet cigarette supply remains steady, suggesting massive reliance on smuggled raw material.
An independent study by Alvarez & Marsal (A&M), shared by Nick Hodsman of BAT, found that imports in 2023 alone could produce 60–80 billion cigarettes. But only 37 billion sticks were recorded in official tax data, meaning nearly 41 billion cigarettes went untaxed.
The Impact:
Loss of billions in FED and GST revenues
Expansion of duty-not-paid (DNP) cigarette brands
Legitimate businesses undermined by the black market
Experts stress that unless border checks are tightened and misdeclaration punished, Pakistan’s illicit trade gap will keep widening, putting pressure on the economy.