Islamabad – ACT Alliance Pakistan stated that Pakistan endured severe trade, business, and tax losses during July to December 2025 as smuggling, under-invoicing, counterfeiting, and non-tax-paid supply chains displaced documented businesses.
National benchmarks indicate the scale. The Pakistan Business Council estimates the combined value of smuggling, under-invoicing, mis-declaration, counterfeiting, and adulteration at about $68 billion in 2023, and estimates annual tax losses from illegal trade as high as Rs. 8 trillion. A PRIME Institute policy report cites an estimated annual tax revenue loss of about Rs. 3.4 trillion. Based on this published range, ACT Alliance estimates that tax leakage linked to illegal trade in the first half of FY 2025-26 may have been roughly between Rs. 2 trillion to Rs. 4 trillion. If the $68 billion estimate is used as an indicator of illegal trade flows, the first half could imply about $34 billion diverted into illegal channels.
“Illegal trade is not a side problem, it is a parallel economy that drains the exchequer and punishes law-abiding firms,” said Mubashir Akram, Country Director, ACT Alliance Pakistan. “These losses mean weaker investment, fewer formal jobs, and a wider gap between the documented and undocumented economy.”
Government enforcement has accelerated. Briefings from the Prime Minister’s Office, reported in business media, noted that measures to curb petroleum smuggling between July and November 2025 increased revenue by 82 percent compared with the same period last year, backed by fuel-station registration and tracking for petroleum transportation.
“Results like the petroleum revenue improvement prove that enforcement can shift volumes back into legal channels,” Akram said. “Pakistan should now replicate that model across cigarettes, electronics, tires, garments, pharmaceuticals, and other high-leakage categories.”
Recent operations show growing attention to supply chains and retail. Official statements described a Regional Tax Office Peshawar operation in Mardan that seized non-duty-paid raw tobacco, with a potential revenue implication of about Rs. 19 billion. Pakistan Customs reported multi-city operations in late October 2025 targeting smuggled cigarettes and raw materials, with seizures valued at over Rs. 1.1 billion. Customs Enforcement Quetta reported seizures of contraband worth Rs. 317 million in December 2025, and Customs Enforcement Karachi reported an intelligence-based raid recovering foreign-origin smuggled goods worth about PKR 20 million.
“Seizing inputs, warehousing stock, and transport consignments is the correct play because it disrupts production and distribution, not just street sales,” Akram said. “Raids that impound illegal goods must become routine at warehouses and shops, not occasional headlines.”
ACT Alliance urged a whole-of-government model that connects border interdiction with retail enforcement, technology-based verification, and faster prosecution under relevant laws. “Confiscation is necessary, but dismantling supply chains and prosecuting financiers is what changes behavior,” Akram said. “Year-round enforcement is the path to protecting revenues and fair competition.”