Cigarette Imports Plunge as Duty Hike Hits Revenue

Cigarette imports have dropped sharply this year, leaving import-duty revenue at just 61 percent of the projected amount. 

Customs data shows that between January and June 2023, the Maldives imported more than 167 million cigarettes, compared with just 41 million imported between January and July this year — a drop of 126 million. At last year’s end, the figure stood at 338 million cigarettes being imported. 

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Data from the Ministry of Finance released yesterday shows the state collected MVR 2.79 billion in import duty as of 27 November, well below the 2025 estimate of MVR 4.58 billion. With one month remaining, the government still needs MVR 1.78 billion to meet its target. Revenue is also down 12.8 percent compared with the same period last year, when collections reached MVR 3.20 billion.

The decline follows the government’s steep increase in cigarette duty. On 31 October 2024, the tax on a pack of 20 cigarettes rose from MVR 60 to MVR 160, driving retail prices up from about MVR 110 to MVR 250. Traders report falling sales since the change, alongside a rise in smuggling and the use of self-made cigarettes.

This year there has been a rise in smuggling and theft involving cigarettes, following the steep increase in tax imposed on cigarettes. One of the most notable was in April of this year when 360 cases — totalling 13.6 million cigarettes worth MVR 122 million — were stolen along with two containers from the Maldives Customs Service site in Hulhumalé. Ten suspects have been arrested, including prominent businessmen and several current and former Customs and MPL employees.  

The approved budget for this year expected government revenue to be MVR 39.8 billion. So far MVR 34.9 has been amassed by the state. With less than a month to go for this year, the government still has to pull in almost MVR 5 billion in revenue to reach the expected amount.