Tobacco Asia

48 tobaccoasia MANUFACTURING NEWS 制造新闻 The output for FY23 is down 27% year-on-year. Sales volumes have decreased at the two major MNCs with a combined market share of over 60% in the formal sector. Meanwhile, efforts to reduce smuggling and stop the trade of illicit cigarettes are still futile. With a share of 37% in FY22's federal excise duty (FED) collections, the tobacco manufacturing industry is the single largest contributor to the Federal Board of Revenue's (FBR) FED collection. The decline in industry output has been mostly attributed mostly to three consecutive FED rate increases in 2022 and 2023. The tobacco industry is concerned about the rising FED, as the increased FED and consequently higher prices have instead resulted to a shift in consumption to the illicit and smuggled sector, or other alternatives. Global Growth Potential for Cellulose Acetate Tow According to a new study by QY Research, the global market for cellulose acetate tow for cigarette filters is projected to reach US$3.76 billion by 2029 from US$3 billion in 2022, with a CAGR of 3.9% during that period. The study found the Asia-Pacific region dominates the cellulose acetate tow for cigarette filter market, driven by rapid industrialization in countries like China and India. The region benefits from low-cost labor, favorable government policies, and rising consumer demand. The market in North America is characterized by technological advancements, a focus on sustainability, and the presence of key players. The US leads in chemical production, with a strong emphasis on r&d. Europe has a mature cellulose acetate tow for cigarette filter industry, with a focus on eco-friendly and sustainable practices. The region's stringent regulations drive innovation in green chemistry and bio-based materials. Latin America and Middle East/Africa offer significant growth opportunities due to expanding industrial sectors, favorable investment policies, and increasing consumer demand. Pakistan Cigarette Manufacturers Accused of Exploiting Exports for Tax Evasion Pakistan's national exchequer is suffering significant losses as a result of companies manufacturing contraband cigarettes dodging taxes at the retail level and also under the pretense of exports, reports Pakistan Observer. Companies that manufacture and sell illegal cigarettes are also involved in evading the advance tax levied on the process- ing of tobacco. "The manufacturers involved in illegal sales declare that tobacco is being bought for exports but the huge quantity purchased without payment of advance tax is being sold in the local market," said an official. To track the production and sale of illegal cigarettes and bring them inside the tax net, the government an advance tax of PKR390 (US$1.37) per kg on purchases of tobacco from green leaf threshing units. Because it is an advance tax collected from the manufactur- ers and is adjustable, the burden does not rest on the tobacco farmers. Statistics from the Pakistan Tobacco Board (TBR) show that 52 different cigarette manufacturers purchased 22.3 million kg of tobacco for US$65.2 million during the 2021– 2022 financial year. The top three tax-paying companies purchased 12.39 million kg of tobacco for US$53.4 million, while the other 49 firms purchased 10 million kg of tobacco for US$11.8 million. Estimates reveal that more than 90% of the tobacco purchased by the 49 manufacturers was sold as cigarettes in the local market without paying tax, costing the national exchequer a loss of PKR4 billion (US$14.02 million) in advance tax alone. Additionally, according to State Bank of Pakistan (SBP) data on tobacco exports, not all of the tobacco bought from green leaf threshing plants gets exported. SBP records show that during the 2021–2022 fiscal year , US$56.9 million of tobacco and alternative products were exported. According to Pakistan Tobacco Board (PTB) figures, during this period 22.3 million kg of tobacco were purchased for export at a cost of US$65.2 million. The disparity in tobacco export numbers between PTB and SBP is approximately equal to the amount of tobacco acquired by the 49 tobacco manufacturers and sold domestically rather than exported. Companies who sell cigarettes illegally are engaging in double tax evasion. Nigerian Manufacturers Confused About Tobacco Tax The Manufacturers Association of Nigeria (MAN) is asking the federal government to clarify the increased excise tax on tobacco products and alcoholic beverages outlined in the 2023 Finance Act. In an interview with The Punch, Francis Meshioye, MAN president, praised president Bola Tinubu for postponing the implementation of several new taxes included in the Finance Act. However, according to Meshioye, there is still some ambiguity around the government's stance on the excise tax on tobacco products and alcoholic beverages. "It is not clear whether this has been suspended," Meshioye said. "It was mentioned by Alake that the president was conscious of this, but he did not clarify whether this would be suspended. Our prayer has been that this should be totally suspended." According to Meshioye, there was a plan for how the increase would be implemented, and manufacturers received the previous administration's assurance that they would follow the plan as intended. "But all of a sudden, we find that this is not the case, that the Finance Act introduced an increase. This is very astonishing to us. We plead that if this is part of what is being suspended by this Executive Order, we want it to be very clear so that our members will not have any problems in compliance and that there would be no threats from any other government agencies, especially Customs," Meshioye added. He continued by pleading that the president suspend the increased excise tax completely, and evaluate the increase already imposed and passes on to consumers. "We are willing to dialogue with the administration and see how we can support the economy without jeopardizing the interest of the manufacturers," he said.

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