HTP Tax Gap Map: Pakistan | Campaign for Tobacco-Free Kids
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Tax Gap of Heated Tobacco Products in Pakistan

The 2021-2022 budget set out by the Federal Board of Revenue introduced a tax on heated tobacco products for the first time. As of February 2023, heated tobacco is taxed at a rate of PKR 6,500 per kg of tobacco.

Pakistan applies a tiered specific excise tax on cigarettes, with 2 tiers dependent on price. There is also a minimum retail sale price. Under the Finance Act of 2022, the statutory tax rates, or Federal Excise Duty (FED) were increased. In August 2023, the tax was increased again. More recently Finance (Supplementary) Bill 2023 introduced on February 14th, 2023, substantially increased the tax rates by 146% for low tier cigarettes and by 154% for high-tier cigarettes. The recent tax changes represent more than a 200% increase in the tax rates on cigarettes. For low-tier/economy cigarettes, the FED is currently set at PKR 101 per pack of 20 cigarettes, and for high-price/premium cigarettes the FED is PKR 330 per pack. The cut-off price increased from PKR 133.2 to PKR 180 per pack.

The minimum regulatory excise tax burden also increased from 45% of the “retail sale price” to 60% of the retail sale price, effective February 2023. The retail sale price used for the calculation of the minimum tax is the lowest cut-off price for tobacco tax, as provided under the "Restrictions of First Schedule” to the Finance Act 2005. This means that the minimum regulatory excise increased from PKR 59.94 per pack to PKR 108 per pack.



Last updated Sept. 1, 2023