Major Tax Evasion of Rs750 Billion Uncovered in Key Business Sectors

Islamabad: A massive tax evasion of Rs750 billion has been uncovered across major business sectors in Pakistan, according to a report released by the private think tank, PRIME. The report highlights widespread illegal trade involving tobacco, pharmaceuticals, tyres, oil, petrol, diesel, and tea.
The tobacco sector alone accounts for 65% of illicit trade, causing an annual revenue loss of Rs300 billion to the national exchequer. Furthermore, approximately 2.8 billion liters of petrol and diesel are smuggled annually from Iran, leading to a revenue loss of Rs270 billion.
In the pharmaceutical sector, around 40% of the medicines are either counterfeit or substandard, resulting in an estimated loss of Rs60 to 65 billion. Additionally, the smuggling of tyres—covering 60% of the market—contributes to tax evasion worth Rs106 billion. The illegal sale of smuggled tea, comprising 30% of the market, costs the economy around Rs10 billion each year.
The report underscores the urgent need for stronger enforcement mechanisms and reforms to curb illegal trade and protect government revenues.