The Federal Board of Revenue has uncovered 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 (EPZ) incentives.
Sources revealed that the scheme may have caused losses of billions of rupees to the national exchequer while allowing expired and potentially harmful cigarette products to enter local markets.
According to industry estimates, the share of smuggled cigarettes in Pakistan reached nearly 11 percent of the total market in 2025, resulting in massive annual tax losses due to evasion.
The controversy came to light after FBR enforcement teams carried out a high-profile raid at Pioneer Tobacco & Trading Company located in the Export Processing Zone, Karachi. What officials discovered during the operation raised serious concerns among regulatory, public health, and fiscal authorities.
During the raid, authorities confiscated around 4.5 million sticks of smuggled foreign cigarettes, including well-known brands such as Marlboro, Camel, Benson & Hedges Nero (Blue and Red), and Cleopatra. Large quantities of cigarette filters, acetate tow, cigarette paper, and expired sheesha flavors were also seized.
Sources allege that expired or near-expiry cigarette stocks are purchased at extremely low prices from international black markets and then smuggled into Pakistan. These products, often rejected by authorized distributors because of shelf-life concerns, can be acquired in bulk at a fraction of their original cost.
Industry experts explain that the shelf life of cigarettes generally ranges between three to six months, depending on storage conditions. After this period, tobacco becomes dry and stale, loses flavor quality, and may undergo chemical degradation and mold formation, making it unfit for human consumption.
Authorities suspect that these expired stocks were repackaged and relabeled to hide original manufacturing details and production dates before being sold in domestic markets.
When contacted, representatives of Pakistan Tobacco Company and Philip Morris International confirmed that such activity is illegal. They stated that Pioneer Tobacco & Trading Company has no 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. These incentives were created to promote exports and investment. However, investigators believe this framework was exploited to import expired cigarette stocks, repack them inside EPZ premises, and divert them into Pakistan’s domestic market in violation of regulations.
Trade data suggests that the same business group has exported consignments to several countries including Ghana, Colombia, Vietnam, and Syria, where regulatory oversight is comparatively weaker. Authorities are now examining the full scale of alleged illegal repackaging activities across all factories linked to the group.
Investigations show that Pioneer Tobacco & Trading Company is owned by a Karachi-based business family with links to multiple tobacco-related entities. These include GB Global, Eastern Industries (Pvt.) Limited, Golden Cigarette Factory, Hub Tobacco Lasbela, and Marsons Group, which is involved in trading cigarette manufacturing and packing machinery.
Following the FBR raid, GB Global approached the court of the Senior Civil Judge in Malir, Karachi, and obtained a stay order restraining FBR officials from conducting further raids, adding a legal dimension to the case.
Repackaging and selling expired cigarettes is illegal in most jurisdictions. Tobacco products are required to carry official health warnings, tax stamps, and manufacturer markings. Altering or removing original packaging breaks the compliance chain and renders the product illicit and non-tax-paid. Concealing expiry dates also constitutes fraud and consumer deception.
Beyond fiscal losses, the case has serious public health implications. Expired and improperly stored tobacco products may contain higher levels of toxic byproducts, increasing health risks for consumers.
Pakistan already suffers large revenue losses from smuggled and non-tax-paid cigarettes. The alleged exploitation of EPZ incentives further strengthens the underground economy and threatens lawful trade.
Following strict instructions from Shehbaz Sharif, the Federal Board of Revenue has intensified its crackdown on tax evasion in the tobacco sector and signaled that enforcement actions will continue despite legal challenges.
The alleged repackaging of expired, smuggled cigarettes has raised serious questions about regulatory oversight in Export Processing Zones and whether long-standing incentive regimes are being misused at the cost of public health, legal commerce, and Pakistan’s economic stability.
