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Cigarette smuggling hits Egypt's economy by LE3 billion annually

While taxes and fees on cigarettes have gone up 25 per cent in the last year, smuggling has skyrocketed, a new report has found

Ahram Online, Saturday 31 Dec 2011
Cigarettes
About 17 billion Cigarettes are smuggled to the Egyptian market Photo: Reuters
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Egypt's economy faces a hit of about LE3 billion ($500 million) yearly, with the smuggling of 17 billion cigarettes to the domestic market, according to a report reviewed by Egyptian Minister of Industry and Foreign Trade Mahmoud Eissa and Minister of Supplies and Domestic Trade Goda Abdel Khalek on Friday.

Smuggled cigarettes reached 20 per cent of total domestic consumption, which is up to 80 billion cigarettes. The smuggled cigarettes constitute a significant tax loss.

"The total taxes and fees on cigarettes rose by 25 per cent compared to last year," Nabil Abdel Aziz, chairman of the Eastern Company, which monopolises the cigarette market in Egypt, told Ahram's Arabic Portal.

He explained that local cigarettes are subjected to LE15 billion as taxes, mentioning that the damage caused by smuggled cigarettes is not only a financial loss but constitutes a violation of global standards, which will severely damage health.

In November, Eastern Company posted a first quarter net profit of LE121 million, up 66 per cent from a year earlier. The company's financial year begins 1 July.

Eastern Company made a net profit of LE72.8 million in the same quarter last year.
 

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