The Public Accounts Committee accused the firms of “turning a blind eye” to smuggling which costs the country £1.9 billion a year.
Margaret Hodge MP, chairwoman of the influential committee, said firms are supplying more tobacco to European countries than their markets could “possibly require” and the products are then brought into the UK market without tax being paid.
The firms are also failing to co-operate with a government crackdown to tackle the problem, the committee said in a new report.
It set out how the taxman did plan to launch a project to combat manufacturers over-supplying tobacco products to high-risk countries, such as Spain, Belgium, the Netherlands and Luxembourg.
But the scheme had to be abandoned because of “legal concerns”, MPs said, adding that Her Majesty’s Revenue and Customs (HMRC) has yet to fine any British manufacturer for over-supplying.