Tobacco Asia

46 tobaccoasia MANUFACTURING NEWS 制造新闻 We'd like to let you in on an industry secret You can view the latest issue of TOBACCO ASIA magazine and TOBACCO ASIA's archived issues and searchable content at www.tobaccoasia.com All free. No passwords. No paywall. Just click and read. This disclosure states that UTC is required to lease the building and the current production lines from Eastern Company for a three-year period in order to continue produc- ing Philip Morris products. Until the conclusion of FY2021/2022 in June 2022, Eastern Company is required to produce Philip Morris products on the same production lines. Following the deal, PMI issued a statement reiterating its full commitment to all existing contractual agreements with suppliers and dealers in order to guarantee the accessibility of its products in Egypt. PMI further stated that it will continue to provide all of its products at the same prices and with the same packaging. Due to rising manufacturing costs and the weakening of the Egyptian pound versus the US dollar, both Eastern Company and Phillip Morris Misr LLC have hiked their cigarette pricing twice so far in 2022. "Eastern Company is trying to absorb the rise in production costs that were caused by recent increases in raw materials costs and also disruptions in supply chains amid the ongoing conflict in Europe," Aman explained. With a variety of brands available at prices ranging from EGP28-52 per pack, Philip Morris products remain the top premium brand in Egypt. Excise Hike on Pakistan Manufacturers In an effort to increase revenue from the tobacco industry, Pakistan's government increased the adjustable federal excise duty (FED) on unmanufactured tobacco from PKR10 (US$0.05) per kg to PKR390 (US$1.76) per kg, applicable at the green leaf threshing (GLT) stage. Details indicate that cigarette manufacturers are subject to and liable for the adjustable excise. This action aims to increase documentation of the tobacco industry while reducing illicit trade. The latest hike in adjustable excise duty is intended to make it more expensive for illegal cigarette makers to cheat the system. When the manufacturer files their returns, the excise tax can be adjusted. In terms of export, manufacturers and exporters both have the option to seek rebates. Pakistan Tobacco Company (PTC) emphasized during a press briefing that farmers are not at all subject to the adjustable excise charge of PKR390 per kg, which is instead a liability on cigarette producers. PTC representatives stated that the misrepresentation being made about how this adjustable excise duty will affect farmers is totally unfounded and untrue. By spreading this false narrative, illegal producers attempt to sway policy in their favor. Officials went on to say that while threshing is a step in the manufacturing process of cigarettes, tobacco farmers have nothing to do with the GLT stage. It is important to note that the government hiked adjustable excise duty in the mini-budget in October 2018 from PKR10 per kg to PKR300 per kg, but it was later reversed before the GLTs became operational due to pressure from some quarters. Experts think that adjustable advance duty at the GLT stage is the best solution to prevent tax evasion as it is the choking point in the cigarette manufacturing process. There are currently about 40 cigarette makers in Pakistan and Azad Jammu and Kashmirand, with around13 GLTs . Regarding enforcement, it is administratively more effective to keep an eye on 13 GLTs as opposed to stationing enforcement agents at more than 40 cigarette manufacturers or hundreds of thousands of retail locations. The payable adjustable excise duty at the GLT stage will also be a measure of the revenue collected from manufacturers at this stage and the proportion that was modified at the time tax returns were filed.

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