Islamabad, May 9, 2025 – Major international tobacco companies have urged Finance Minister Muhammad Aurangzeb to reform Pakistan’s excise duty framework in order to combat illicit trade, increase tax revenue, and stabilize the formal tobacco sector.
During his official visit to the United Kingdom, Finance Minister Aurangzeb held a high-level meeting with senior executives of British American Tobacco (BAT). The representatives expressed serious concerns over Pakistan’s current excise duty regime, which they argued is fostering the growth of illicit and counterfeit tobacco products. The meeting, according to an official press release, was aimed at addressing long-standing issues within Pakistan’s tobacco industry and exploring ways to strengthen revenue generation through regulatory reforms.
BAT officials highlighted that the existing excise duty structure is both high and inconsistent, creating a pricing gap that illicit traders have exploited. As a result, a significant portion of the market has shifted toward unregulated tobacco products, hurting both legitimate businesses and government revenue streams. The foreign tobacco representatives argued that a rationalized and predictable duty system would reduce smuggling, attract consumers back to legitimate channels, and enhance the government’s fiscal intake.
The delegation proposed a more balanced and transparent tobacco taxation model, which they believe would help formalize the sector, improve regulatory oversight, and support economic growth. They emphasized that international experience shows how rational tax policies can lead to sustainable benefits for both the state and legitimate industry players.
In response, Finance Minister Aurangzeb acknowledged the pressing nature of the issue. He assured the tobacco representatives that their proposals would be thoroughly considered in the formulation of the upcoming federal budget 2025–26. Aurangzeb reaffirmed the government’s broader commitment to tax fairness, sectoral formalization, and effective measures to tackle illicit trade.
Aurangzeb also noted that reforms in the tobacco sector must balance public health goals with the need to bring stability and transparency to market operations. The meeting concluded with a mutual agreement on the importance of creating a predictable, rules-based environment for tobacco commerce in Pakistan, one that supports both national revenues and fair competition.