The National Board of Revenue (NBR) is set to send letters to two multi-national cigarette manufacturers seeking stock information and sales data for the previous two years as it has found that the two companies evaded huge amounts of revenue in the fiscal year of 2023-24.
According to two NBR demand notes, the companies — British American Tobacco, Bangladesh (BAT) and Japan Tobacco International (JTI) — evaded paying Tk 210 crore and Tk 13 crore in value-added tax (VAT), respectively, in FY24 by hiding stocks information and sales data.
After finding out this information, NBR officials are now thinking that the two companies have evaded revenues in the previous years as well in the same way.
The NBR’s Large Taxpayers Unit (LTU-VAT) recently served notices to the two companies after verifying the stock and sales data of factories and warehouses.
Regarding this, LTU-VAT Commissioner Md Shamsul Islam told The Business Post on Tuesday “Based on the evidence, two demand notes have been sent to the two companies separately. The money is recoverable.”
Although customers have to purchase cigarettes at an increased price following a hike in tax in the national budget every year, the government fails to collect revenue accordingly in the first several months, owing to the strategies of the cigarette companies, according to NBR officials.
The companies produce the surplus before the budget and unload the goods from their factories by paying the duty and tax set on the outgoing budget. These cigarettes are sold to consumers at a higher price, they said.
“As companies exploit this opportunity every year, we collect information about the stock of cigarettes by visiting their factories a day before the budget presentation,” said an NBR official.
“We visited the depots and warehouses of these two companies [BAT and JTI] in various areas in Gazipur and found that they are supplying the same cigarettes to district-level dealers at an increased price by adding duty and tax set in the new budget,” added the official.
Bangladesh is one of the largest tobacco-consuming countries in the world, with over 46 million (43 per cent) adults consuming cigarettes, bidis, smokeless tobacco or other tobacco products.
The government collects revenues worth over Tk 30,000 crore per year from this sector.
