British American Tobacco Bangladesh (BAT Bangladesh) is facing scrutiny for allegedly evading BDT 2.51 billion in VAT on tobacco leaf purchases during 2022–2023. The company claimed that 5.2 million kilograms of tobacco leaves were lost during processing, but the National Board of Revenue (NBR) found this explanation unconvincing. An audit conducted by the Large Taxpayer Unit (LTU–VAT) confirmed that BAT failed to pay the applicable withholding VAT. The case has been reported by National Daily News, with journalist Rahmat Rahman covering the details of these significant tax irregularities.

BAT Bangladesh Faces Tax Probe for 5.2M Kg Tobacco, BDT 2.51 Billion VAT: NBR

” The publicly listed multinational cigarette manufacturer British American Tobacco Bangladesh Company Limited (BAT Bangladesh) has been accused of serious tax evasion over the non-payment of withholding Value Added Tax (VAT) on tobacco leaf purchases. An audit conducted by the Large Taxpayer Unit (LTU–VAT) of the National Board of Revenue (NBR) found that the company purchased a substantial volume of tobacco leaves locally in 2022 and 2023 but failed to pay the applicable withholding VAT.

According to the audit findings, BAT Bangladesh purchased tobacco leaves worth approximately BDT 33.53 billion over the two-year period. Under prevailing tax laws, tobacco leaves are not VAT-exempt, and withholding VAT at a rate of 7.5 percent is mandatory on such purchases. Based on this rate, the company owes more than BDT 2.51 billion in unpaid VAT. NBR estimates that if the evasion is fully established, the government’s total receivable—including interest—could exceed BDT 3 billion.

The LTU stated that BAT Bangladesh failed to include tobacco leaf purchases in its VAT return (Mushak–6.1) and neither deducted nor deposited withholding VAT, constituting a direct violation of the Value Added Tax and Supplementary Duty Act, 2012 and the Withholding VAT Deduction and Collection Rules, 2021. In response to these irregularities, a show-cause notice was issued to the company in late 2024. Following hearings, a final demand notice amounting to BDT 2.51 billion was issued in January 2025.

The final demand order further noted that BAT Bangladesh attempted to avoid VAT payment by claiming that approximately 5.2 million kilograms of tobacco leaves were destroyed or blown away during processing-an explanation the audit authorities deemed unacceptable. An earlier audit conducted by the VAT Audit, Intelligence and Investigation Directorate covering the period from January 2015 to December 2018 revealed significant discrepancies in tobacco usage data across several popular cigarette brands. A comparison between Mushak–15 and Mushak–1 returns showed inconsistencies involving more than 5.2 million kilograms of tobacco, on which no VAT, supplementary duty, or health development surcharge was paid.

BAT Bangladesh has filed a writ petition with the High Court challenging the final demand and sought a suspension of enforcement during NBR hearings. However, according to the LTU Commissioner, no stay order has been issued by the court, meaning there is no legal impediment to finalising the tax assessment. The LTU also noted that failure to issue the final demand within the statutory timeframe would render the claim time-barred and deprive the government of lawful revenue.

Overall, NBR maintains that BAT Bangladesh has repeatedly avoided paying withholding VAT on tobacco leaf purchases and has relied on legal proceedings to delay revenue collection. In response, BAT Bangladesh stated that since the matter is currently sub judice, it is unable to comment publicly on the issue.”

News link: https://jatiyoarthoniti.com/2026/02/25/%e0%a6%a4%e0%a6%be%e0%a6%ae%e0%a6%be%e0%a6%95-%e0%a6%aa%e0%a6%be%e0%a6%a4%e0%a6%be-%e0%a6%95%e0%a7%87%e0%a6%a8%e0%a6%be%e0%a6%af%e0%a6%bc-%e0%a6%ad%e0%a7%8d%e0%a6%af%e0%a6%be%e0%a6%9f-%e0%a6%a6/?fbclid=IwY2xjawQLeAFleHRuA2FlbQIxMABicmlkETJXUmYwaUtkTEM1VnRGYjJkc3J0YwZhcHBfaWQQMjIyMDM5MTc4ODIwMDg5MgABHqlPnOUwcp63SgP9hdx971NQ6j2I2hUdjHhUMKyrZzK036FPizkRJtmiids0_aem_YCKqrNFWpKxESAvL4m4sxA