Philip Morris records Rs 1.7b profit in six months

Islamabad: Philip Morris (Pakistan) Limited (Company) posted a Profit after Tax of PKR 1,720 million for the six months ended June 30, 2021.

Philip Morris products are cigarettes in Pakistan.

It had recorded a Profit after Tax of PKR 1,253 million for the same period last year.

During the stated period, Philip Morris’s domestic net turnover stood at PKR 9,224 million reflecting an increase of 4.7% as compared to the same period last year.

During the six months ended June 30, 2021, the Company’s contribution to the National Exchequer, in the form of excise duty, sales tax, and other government levies, stood at PKR 14,435 million (higher by 15.5% compared to the same period last year) reflecting 60% of half-yearly Gross Turnover.

No change in excise rates on cigarettes during federal budget 2020/2021 proved to be positive for Government Revenue and Philip Morris’ contribution to the National Exchequer during fiscal year (July’20-Jun’21) in the form of excise duty, sales tax, and other government levies, which stood at PKR 24,052 million (higher by 18.7% compared to the previous fiscal year July’19-Jun’20).

No change in excise rates during the fiscal year 2020/21 also led to price stability for tax paid cigarette industry. However, the issue of non-tax paid illicit cigarettes continues to have a detrimental effect with a market share of approximately 40% (which in 2013 was 23%) resulting in an annual loss of PKR 70-77 billion (estimated) to the national exchequer.

Sharing his views on the announcement, Roman Yazbeck, Managing Director at Philip Morris (Pakistan) Limited said “Although last year brought a series of unprecedented challenges due to the pandemic, our entire management team remained committed to minimizing disruption as a means of ensuring business continuity whilst complying with applicable laws.

We appreciate the Government’s efforts in taking steps to curb the menace of the illicit sector but strict and consistent enforcement is extremely critical against tax-evading the illicit sector to provide a level playing field for the compliant tax-paying industry and to improve Government revenue.”

While highlighting the need for implementation of the Track and Trace system, he urged the Government for robust and regular enforcement of laws in letter and spirit to ensure a level playing field across the board in the tobacco industry.

He appreciated the Government’s efforts for creating checks for goods including cigarettes coming in illegally from the Azad Jammu & Kashmir (AJ&K) trade route to ensure proper taxation of goods arriving in Pakistan.

Roman Yazbeck also appreciated Government’s efforts in issuing the Sales Tax General Order (STGO) dated August 3, 2021, which requires manufacturers of specified goods including tobacco to obtain brand registration certificates.

The STGO is an important step in curbing illegal non-tax paid to trade. He said that strict implementation of this STGO would support the eradication of non-tax-paid illicit cigarette manufacturers who are selling cigarettes at a lower price than the minimum price prescribed under tax laws for the purposes of levy and collection of federal excise duty.