For the first time, the Prime Minister’s Office has directly sought documents over alleged Tk1 billion in tax evasion by British American Tobacco Bangladesh Company Limited (BAT Bangladesh), giving the issue significant national attention. The move sends a strong and positive message about transparency, accountability, revenue protection and stricter tax compliance in Bangladesh’s tobacco sector. Details is here…

” The Prime Minister’s Office (PMO) has sought relevant documents and a report from the National Board of Revenue (NBR) following a news report alleging that British American Tobacco Bangladesh (BATB) evaded a substantial amount of taxes. After Daily Inqilab published a report titled “BAT’s Tax Evasion Worth Hundreds of Crores” on August 17, the NBR was instructed to submit a report on the matter promptly.

In a letter dated August 23, 2026, signed by PMO Director-5 Md Ashraful Islam, the NBR chairman was asked to urgently submit the necessary report, referring to the report published in Inqilab. A two-page copy of the news report was also attached to the letter.

The Inqilab report raised allegations that BATB concealed income, understated taxable income, reduced tax payments by showing tax stamps or banderols as wasted, and generated large quantities of cigarettes before the budget in order to pay duties and taxes at the old rates and earn additional profits. The report cited information from audits conducted by the NBR’s Large Taxpayer Unit (LTU) and VAT-related documents as the basis for the allegations.

According to the report, in the 2022–23 tax year, BATB reported income of Tk27,307.9 million in its income tax return. Later, an LTU audit determined the company’s income at Tk29,423.1 million. This means the audit found Tk2,115.2 million more income than was reported in the return. The news report referred to this amount as part of the alleged income concealment. However, while the headline and introduction of the report referred to Tk2,210 million, the main body stated Tk2,115.2 million.

This additional income is also significant from a tax perspective. The report said that considering the applicable 45% corporate tax rate for tobacco-product manufacturers along with a 2.50% surcharge, the alleged concealed income could result in a tax issue involving more than Tk1,000 million. However, this should not be treated as the company’s final tax liability until the NBR’s audit, settlement of objections, and legal processes are completed.

The report also said that the LTU examined not only the issue of income concealment but also various categories of BATB’s expenses. These included production and sales, gratuity, additional expenses claimed in profit-and-loss accounts, sales expenses, commissions, legal and secretarial expenses, safety and security, audit fees, distribution, research and development, and dividend payments. The audit reportedly examined whether some of these expenses were overstated to reduce actual profits and taxable income.

Questions Over Tax Stamps and Banderols

Another allegation against BATB concerns the reported wastage of tax stamps or banderols. The report said that between April and June 2025, the company allegedly evaded around Tk230 million in VAT by showing usable tax stamps as wasted. If the same rate continued throughout the year, the amount could reach approximately Tk920 million. However, Tk920 million is not a final audit-determined liability; it is an annualized calculation based on the three-month allegation.

The report said the issue involved banderols used on cigarettes under brands including Derby, Pilot, Hollywood, Royals, Star, Capstan, Lucky Strike, Gold Leaf and Marlboro. BATB reportedly explained that the stamps were damaged due to factory relocation and the relocation of workers. NBR officials, however, reportedly questioned how such a large number of stamps could have been destroyed within a single day. The report also claimed that the company was asked to provide supporting evidence but failed to provide satisfactory proof.

Alleged Pre-Budget Stockpiling

The report also highlighted allegations of excessive cigarette production and stockpiling before the budget announcement. It said that before the announcement of the 2024–25 fiscal year budget, BATB produced and stored 3,565,002,975 packs of cigarettes in warehouses. Duties and taxes were paid on these cigarettes at the rates then in effect. When cigarette prices and tax rates were subsequently increased in the budget, the cigarettes on which taxes had been paid at the old rates could be sold at the new prices.

According to figures cited in the documents, the government received Tk3,033.65380806 million in revenue from the stockpile. Under the new tax rates, the government was expected to receive Tk3,255.52014270 million. The difference between the two figures was Tk221.86633464 million. However, the news report cited Tk210.86633442 million as the alleged revenue loss. This discrepancy also requires clarification through the NBR’s investigation.

The report claimed that the LTU-VAT had issued a show-cause notice to BATB over the matter. The key question is whether the applicable duties and taxes were collected on the additional value when cigarettes produced and taxed before the budget were subsequently sold at prices set under the new rates.

Labor Disputes

The allegations against BATB are not limited to tax and revenue issues. In recent years, contract and seasonal workers of the company have staged several protests demanding permanent employment and improved labor rights. In July and August 2026, workers in Kushtia, Rangpur and other areas reportedly held work stoppages and protest programmes demanding the abolition of the contractor system and permanent employment. Similar labor unrest reportedly occurred in 2025 over appointment letters, provident funds, gratuity and other demands.

The PMO’s request for documents and a report is being viewed as an important administrative step toward verifying the allegations published against BATB. However, allegations raised in a news report and a tax liability finally determined by the NBR are not the same thing. The report sought by the PMO is expected to clarify which allegations have been established through audits, where revenue shortfalls occurred, and what action has been taken against the company.

Comments from Tobacco Tax Analyst

Ibrahim Khalil, a tax analyst at the Bangladesh Network for Tobacco Tax Policy (BNTTP), said multinational tobacco company BATB was allegedly evading around Tk50,000 million in government revenue every year by selling cigarettes above the maximum retail price (MRP).

He also alleged that the company was depriving the government of several thousand crores of taka in annual revenue through alleged banderol and stamp irregularities, misuse of wording in budget proposals, and the sale of cigarettes produced at old tax rates at new prices.

“We have been trying for a long time to bring the matter to the NBR’s attention. If a company wants to do business in the country, it must do so legally. The PMO’s initiative is highly positive. We hope that the authorities will also consider information on its past revenue irregularities and conduct an investigation and ensure proper compliance with the law. The way the company is allegedly challenging and disregarding the country’s laws in conducting its business should also be brought under the law,” he said.”

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