Pakistan Tobacco Company (PTC) has expressed concerns that the implementation of the Track and Trace System (TTS) has not been effective in curbing the illicit trade of cigarettes as originally intended.
According to PTC’s annual report for the year ended December 31, 2025, the system has instead led to increased operating costs for compliant businesses, while failing to achieve widespread industry compliance.
PTC highlighted that, rather than serving as a deterrent to tax evasion, TTS has added an extra financial burden on legitimate manufacturers. “Without stricter enforcement, the system risks becoming an additional burden on legitimate businesses rather than effectively curbing illicit trade,” the report stated. The company stressed that TTS, in its current form, has not been successful in reducing the prevalence of smuggled cigarettes across Pakistan. The report pointed out that an exorbitant excise increase in FY 2022/23 has contributed to a notable rise in illicit trade, with smuggled cigarette brands becoming increasingly available in both urban and rural areas.
Research conducted by IPOR on Track & Trace compliance in the tobacco industry revealed that out of 413 brands surveyed, only 19 were fully compliant with the Track and Trace regime. The remaining 394 brands included 286 smuggled brands, which were not only sold without the mandatory tax stamps but also lacked the required Graphical Health Warnings (GHWs). This stark contrast highlighted the failure of the TTS in preventing the sale of non-compliant products.
While the authorities have introduced initiatives such as the TTS to safeguard consumer interests, protect the legitimate industry, and secure sustainable tax revenues, the enforcement of these measures has been inconsistent. Instances of counterfeit TTS stamps and the continued sale of tax-stamp-free cigarettes at points of sale point to significant loopholes in implementation. Additionally, manufacturers operating in Azad Jammu and Kashmir (AJ&K) remain outside the scope of the TTS, further complicating the enforcement of industry-wide compliance.
PTC emphasized the need for stronger enforcement measures to ensure that the TTS fulfills its intended purpose of reducing illicit trade. Without these improvements, the system risks becoming an ineffective and costly tool for legitimate manufacturers, undermining efforts to tackle tax evasion in the tobacco industry.