The Federal Board of Revenue has uncovered a major scandal in Pakistan’s tobacco sector, exposing the alleged repackaging of expired and smuggled foreign cigarette brands under the cover of Export Processing Zone incentives.
Sources revealed that the scheme may have cost the national exchequer billions of rupees while flooding local markets with expired and potentially hazardous cigarette products.
According to industry estimates, the share of smuggled cigarettes in Pakistan reached 11 percent of the total market in 2025, resulting in significant annual tax revenue losses due to evasion.
The controversy erupted after FBR enforcement teams conducted a high-profile raid at M/s Pioneer Tobacco & Trading Company located in the Export Processing Zone, Karachi.
During the operation, authorities reportedly confiscated around 4.5 million sticks of smuggled foreign cigarettes, including brands such as Marlboro, Camel, Benson & Hedges, and Cleopatra, along with cigarette filters, acetate tow, cigarette paper, and expired sheesha flavors.
Sources allege that expired or near-expiry cigarette stocks are purchased cheaply from international black markets and smuggled into Pakistan. Such products are often rejected by authorized distributors due to limited shelf life and quality concerns.
Industry experts note that cigarettes typically have a shelf life of three to six months depending on storage conditions. Beyond this period, tobacco may dry out, lose flavor integrity, and undergo chemical degradation, potentially leading to mold formation and rendering the product unsafe.
Authorities suspect that these expired stocks were repackaged and relabeled within EPZ premises, allegedly concealing original manufacturing dates before redistribution into local markets.
Representatives of Pakistan Tobacco Company and Philip Morris International confirmed that M/s Pioneer Tobacco & Trading Company does not have authorization to import, manufacture, or export their branded products.
At the center of the case is the alleged misuse of Export Processing Zone incentives. Under various SROs, goods imported into and exported from EPZs are exempt from customs duties and sales tax to promote exports. However, experts believe this exemption framework may have been exploited to import expired stocks, repackage them, and divert them into domestic markets.
Trade data suggests that associated entities exported consignments to countries including Ghana, Colombia, Vietnam, and Syria, raising further concerns about regulatory oversight.
Following the raid, another related entity reportedly obtained a stay order from the Senior Civil Judge, Malir, Karachi, temporarily restraining FBR from conducting further raids at its premises.
Repackaging and selling expired cigarettes is illegal and violates mandatory requirements such as health warnings, tax stamps, and manufacturer markings. Altering expiry dates constitutes fraud and consumer deception, while unauthorized use of branded packaging raises intellectual property concerns.
Beyond fiscal losses, the scandal carries serious public health implications. Expired and improperly stored tobacco products may increase exposure to harmful byproducts, compounding already known health risks associated with smoking.
Following strict instructions from Shehbaz Sharif, the FBR has intensified its crackdown on tax evasion in the tobacco sector. Authorities signaled that enforcement actions will continue despite legal challenges, as investigations into the alleged network remain underway.
Also read: Sale of E-Cigarettes and Vapes Prohibited
