Smuggling concerns rise as cigarette duty revenue falls, forecast slashed by 32 percent

Cigarette imports have fallen sharply this year, with import duty revenue so far reaching just 61 percent of the estimated amount, according to Finance Ministry figures on Sunday.  

Data released by the Ministry shows import duty collection stood at MVR 2.79 billion as of 27 November, against an estimate of MVR 4.58 billion for 2025. With one month left in the year, MVR 1.78 billion is still needed to meet the target. The figure is down 12.8 percent compared to the same period last year, when import duty revenue stood at MVR 3.20 billion.  

One of the main reasons for the decline is the government’s decision to sharply increase cigarette duty. On 31 October 2024, the duty on a box of 20 cigarettes was raised from MVR 60 to MVR 160, pushing retail prices from MVR 110 to MVR 250 per pack. Traders report that sales have since declined, while smuggling and self‑made cigarettes have increased.  

Customs statistics confirm the drop: from January to June 2023, more than 167 million cigarettes were imported, compared to just 41 million between January and July this year, a difference of 126 million.  

Deputy Speaker Ahmed Nazim noted earlier this year that state revenue was lower due to reduced cigarette imports. Former Finance Minister Ibrahim Ameer also confirmed the trend, stating that cigarette duty revenue fell from MVR 100 million in January 2024 to just MVR 5 million in January this year.  

Ameer said the government had expected to collect MVR 1.04 billion from cigarette duties last year and MVR 1.1 billion this year, totaling about MVR 2.1 billion. Instead, revenue has fallen short.  

Overall, the government projected MVR 39.8 billion in revenue and grants this year, but has received only MVR 35 billion so far, including MVR 26.1 billion in tax revenue.  

The ruling PNC’s supermajority parliament has passed a record MVR 64 billion budget for 2026, estimating MVR 40 billion in revenue and grants. Of this, MVR 31.3 billion is expected from taxes, two billion more than this year’s estimate. However, projected import duty revenue has been cut to MVR 3.13 billion, a 32 percent reduction.  

Maldives’ debt is forecast to rise by USD 1.1 billion next year alone. Critics, including the opposition and the Auditor General’s Office, argue that the 2026 budget lacks clear policies to increase revenue or reduce spending. The Auditor General also highlighted MVR 606 million owed to Customs in unresolved tobacco duty cases and fines.  

As part of anti‑tobacco measures, the Maldives banned the use, possession, manufacture, sale, advertising, and distribution of vaping products on December 15, 2024.