The Federal Board of Revenue has uncovered what officials describe as a major scandal in Pakistan’s tobacco sector, involving the alleged repackaging of expired and smuggled foreign cigarette brands under the cover of Export Processing Zone incentives.
Sources said the scheme may have caused billions of rupees in losses to the national exchequer while allowing expired and potentially unsafe products to enter local markets.
According to industry estimates, the share of smuggled cigarettes in Pakistan reached 11 percent of the total market in 2025. This has reportedly resulted in billions of rupees in lost tax revenue due to evasion.
The issue came to light after FBR enforcement teams conducted a raid at M/s Pioneer Tobacco & Trading Company in the Export Processing Zone, Karachi. During the operation, authorities seized around 4.5 million sticks of smuggled foreign cigarette brands, including Marlboro, Camel, Benson & Hedges Nero, and Cleopatra. Officials also confiscated large quantities of cigarette filters, acetate tow, cigarette paper, and expired sheesha flavors.
Sources allege that expired or near-expiry cigarette stocks are purchased at low prices from international black markets and then smuggled into Pakistan. These products, often rejected by authorized distributors due to shelf-life issues, are reportedly acquired in bulk at a fraction of their original cost.
Industry sources say cigarettes usually have a shelf life of three to six months, depending on storage conditions. After this period, tobacco can dry out, lose flavor, and undergo chemical changes that may lead to mold, making the product unfit for use.
Authorities suspect that such expired stocks were repackaged and relabeled, allegedly hiding original manufacturing details and expiry dates before being redistributed.
Representatives of Pakistan Tobacco Company, which owns the Benson & Hedges brand, and Philip Morris International, which owns Marlboro, confirmed that M/s Pioneer Tobacco & Trading Company does not have authorization to import, manufacture, or export their products. They stated that such activities are illegal.
At the center of the controversy is the alleged misuse of Export Processing Zone incentives. Under various notifications issued over the years, goods imported into and exported from EPZs are exempt from customs duties and sales tax to promote exports. However, experts believe these exemptions may have been misused to import expired cigarette stocks, repackage them within EPZ premises, and divert them into the domestic market, which would violate EPZ regulations.
Trade data also suggests that the same business group has exported consignments to countries including Ghana, Colombia, Vietnam, and Syria. Sources have called for a wider investigation into the scale of alleged repackaging activities across all factories linked to the group.
Investigations indicate that M/s Pioneer Tobacco & Trading Company is reportedly owned by a Karachi-based business family. Muhammad Arif and Muhammad Akif are said to have ownership stakes or operational control in multiple tobacco-related enterprises, including M/s GB Global, M/s Eastern Industries (Pvt.) Limited, M/s Golden Cigarette Factory, Hub Tobacco Lasbela, and M/s Marsons Group. Marsons Group is reportedly involved in trading, cigarette manufacturing and packaging machinery.
Sources allege that Pioneer Tobacco’s main operations include repackaging expired foreign brands imported under EPZ facilities, while local brands such as Nine, Master, Liston, AA Gold, Pioneer, and Rocco are reportedly produced by Eastern Industries (Pvt.) Limited.
After the raid, M/s GB Global approached the court of the Senior Civil Judge in Malir, Karachi, and obtained a stay order restraining FBR officials from conducting raids at its premises.
Repackaging and selling expired cigarettes is illegal in most countries. Tobacco products must carry required health warnings, tax stamps, and manufacturer markings. Altering or removing original packaging can make the product illicit and non-tax-paid. Tampering with expiry dates may also constitute fraud and consumer deception.
Officials say Pakistan already faces heavy losses from smuggled and non-tax-paid cigarettes. If EPZ incentives are being misused, it could further damage the country’s tax system and trade reputation. There are also serious public health concerns, as expired and improperly stored tobacco may increase health risks.
Following instructions from Prime Minister Shehbaz Sharif, FBR has intensified its crackdown on tax evasion in the tobacco sector. Authorities say enforcement actions will continue despite ongoing legal challenges.
The case has raised wider concerns about regulatory oversight in Export Processing Zones and whether long-standing incentive schemes are being exploited at the expense of public health, lawful trade, and the national economy.
