Political backing stalls action on tobacco tax evasion, Khyber Tobacco in focus

ISLAMABAD: A growing sense of frustration is taking hold within the Federal Board of Revenue (FBR) as allegations of political influence threaten to derail a major crackdown on tax evasion in the cigarette industry.

Multiple companies within the tobacco sector have come under scrutiny in recent operations, including Universal Tobacco Company, Indus Tobacco Company, Souvenir Tobacco Company, and Khyber Tobacco Company.

Officials allege that elements within the industry have long operated in a loosely regulated space, where enforcement is often challenged or delayed.

The situation has raised serious questions about accountability. Investigations initiated by the Federal Investigation Agency into alleged tax evasion and money laundering, including a high-profile probe into Universal Tobacco and Kyber Tobacco, have reportedly lost pace, further fueling concerns.

Despite repeated directives from Prime Minister Shehbaz Sharif to tighten enforcement, field officers say their hands are effectively tied. Officials describe an environment where pursuing powerful interests comes at a professional cost, from public humiliation in parliamentary forums to behind-the-scenes pressure to slow down investigations.

According to official data, enforcement actions have been inconsistent. While 624 raids were conducted in fiscal year 2023–24, the number dropped to 472 in 2024–25. Although around 710 actions have been reported in the current fiscal year so far, insiders warn that momentum is weakening.

Adding to the unease, some Inland Revenue officers claim they are increasingly reluctant to pursue aggressive legal action, fearing institutional backlash.

The role of oversight forums such as the Senate Standing Committee on Interior has also come under quiet scrutiny, with suggestions that enforcement officials have faced undue pressure.

Meanwhile, the FBR has seized raw materials worth over Rs4 billion in recent operations, signaling that irregularities in the sector remain significant.