ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a new initiative to digitally monitor the entire tobacco-to-cigarette value chain in an effort to curb widespread tax evasion in the sector. The tax authority has directed all cigarette factories and green leaf threshing stations to install IP-based CCTV cameras at designated points to track production in real time.
Under the Sales Tax General Order No. 7 of 2025, the FBR mandated that no finished goods can leave factory premises unless the production process is fully recorded and monitored. The monitoring system is already in place at all nine green leaf threshing stations, including two operated by multinational companies and seven managed locally. Officials say the system will enhance quality control and allow straightforward tracking of tobacco processing.
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The FBR believes that digital monitoring will help determine the actual production potential of the cigarette industry and boost revenue collection. Cigarettes are among the top 20 revenue-generating products for the government, with a standard 18% sales tax under the Sales Tax Act, 1990, and Federal Excise Duty levied under the Federal Excise Act, 2005.
Field formations have been instructed to ensure immediate installation of CCTV systems at all tobacco manufacturing units. According to the FBR, current tax collection falls short of the sector’s potential, which private sector estimates suggest could reach roughly Rs600 billion annually if fully monitored and compliant.
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Authorities said the initiative is part of broader efforts to improve transparency, curb illegal practices, and maximize revenue from Pakistan’s tobacco industry.