The National Board of Revenue has decided to conduct drive against illegal tobacco trading in the market to secure revenue collection from the sector.
NBR issued a directive in this regard on February 6.
The revenue authority instructed all VAT commissionerates to set up a six-member committee in each circle to improve tax collection from tobacco industry and crack down on illegal trade.
The newly formed committees will conduct daily inspections of markets, warehouses and other high-risk locations.
They will also collect intelligence report on illegal tobacco trading and take appropriate actions as necessary.
Each committee will be headed by the circle鈥檚 revenue officer as convener, while three members from law enforcement agencies would help tax officials in performing their job.
The NBR gave such instruction using the power stated in Value Added Tax and Supplementary Duty Act, 2012.
Circle officers will supervise the committees, while LTU VAT commissioners will provide consultations when required.
鈥楻ecent media reports have highlighted the widespread availability of illegal tobacco products in both urban and rural areas, raising concerns about the government losing huge revenue and about the revenue authority鈥檚 ability to control the issue,鈥� the directive read.
Other members will include a representative from tobacco companies and an assistant revenue officer, who will serve as member secretary.
To ensure accountability, divisional officers will submit monthly reports on the effectiveness of these enforcement activities. The NBR also announced plans to recognise top-performing officers with a 鈥楥ertificate of Recognition鈥� as part of the initiative.
The directive highlighted the importance of stricter monitoring due to rising concerns over illegal tobacco sales, which are causing significant revenue losses for the government.
Tobacco products, including cigarettes and bidis, contribute about 25 per cent of the country鈥檚 total VAT revenue, according to the directive.
By forming these bodies, the revenue board aims to tighten control over illegal tobacco sales and secure the stream of tax revenue.
A recent study, conducted by Bureau of Economic Research of the Dhaka University and the Bangladesh Network for Tobacco Tax Policy, said that the tobacco companies in Bangladesh evaded government revenue of Tk聽3,784 crore during the 2023-24 fiscal by selling cigarettes at prices higher than the maximum retail price printed on the packets.
The study found that cigarette prices in the market exceeded the MRP by 8 per cent to 21 per cent during the 2023-24 fiscal.
Since government tax revenue is calculated based on the printed MRP, this price inflation benefits tobacco companies while depriving the exchequer of significant revenue.