A new study found that cigarette manufacturers in Bangladesh are evading an estimated Tk 5,182 crore ($480 million) in government revenue by manipulating retail prices and not adhering to the declared maximum retail price (MRP). The research, conducted by the University of Dhaka’s Bureau of Economic Research in collaboration with the Bangladesh Network for Tobacco Tax Policy, revealed that while manufacturers sell cigarettes to retailers at the printed MRP, retailers often sell them to consumers at significantly higher prices. This practice results in widespread sales above the official MRP, depriving the government of substantial tax revenue. The study, presented at a discussion at Dhaka Reporters Unity today (March 5), urged stronger regulatory oversight and stricter monitoring to curb price manipulation and improve tax compliance in the tobacco sector.
Tag: tax evasion
-
Bangladesh Uncovers Major Cigarette Tax-Evasion Scheme
Bangladesh’s National Board of Revenue (NBR) says a raid on United Tobacco Industries Limited in Ishwardi, Pabna, uncovered the equivalent of Tk 90 million ($738,000) in tax-evaded products. Investigators said that despite the company having VAT registration, it was secretly producing and marketing cigarettes without showing formal production activities.
Authorities seized 634,590 cigarettes carrying fake banderoles—worth more than Tk 3.8 million ($31,000)—linked to nearly Tk 2.9 million ($24,000) in evaded government revenue. They also recovered 1.03 million unused fake banderoles, which the NBR says could have enabled more than Tk 85 million ($697,000) in additional tax losses.
All materials have been confiscated, legal action is underway, and the VAT Commissionerate will tighten oversight of the company’s operations, the NBR said.
-
Two Sentenced, Tanker Seized in Bahrain Over 4 Tons of Illegal Tobacco
The Second Minor Criminal Court in Bahrain sentenced two people and seized a tanker, all connected to an attempt to smuggle four tons of tembak into the country. The first defendant was sentenced to three years in prison and fined BD 60,000 ($159,000) and the second defendant was sentenced to six months in prison for attempting to import the banned tobacco.
Customs officials discovered the tobacco “cleverly hidden inside the tanker” being brought through the seaport. The Tax Evasion Crimes Unit launched an investigation, and the second defendant admitted they had falsified documents in an attempt to bypass import restrictions.
-
75 Tax Evasion Cases Filed in Philippines Crackdown
The Bureau of Internal Revenue (BIR) in the Philippines filed 75 tax evasion complaints against vape retailers nationwide, accusing them of evading a combined ₱711.3 million ($12.8 million) in taxes by selling smuggled and unstamped products.
BIR Commissioner Romeo Lumagui Jr. said the cases, lodged with the Department of Justice today (August 20), involve violations ranging from unpaid excise duties to failure to file tax returns. The crackdown follows earlier billion-peso cases against major brands like Flava, Denkat, Flare, and Tap Fog.
“The government loses billions from illicit vape sales — money that should fund health care and infrastructure,” Lumagui said, vowing continued action against both big and small operators.
-
Bangladesh Officials Meet to Stop Tobacco Use, Tax Evasion
Yesterday (March 18), National Board of Revenue (NBR) chairman Md Abdur Rahman Khan said Bangladesh was considering the introduction of a QR code system band-roll for the tobacco sector to prevent tax evasion. Speaking at a pre-budget meeting with the Anti-Tobacco Media Alliance (ATMA), he said that high taxes on tobacco products have created a huge amount of illicit cigarettes entering the country, thus depriving the NBR of due revenue.
The chairman said some bidi companies use counterfeit band-rolls to avoid paying taxes in the national exchequer.
“Even they bring those band-rolls from abroad after printing in there,” he said. The NBR chairman put emphasis on establishing a cashless society to stop tax evasion.
The ATMA argued cigarette prices in the country were too low, and that having a four-tier price system (low, medium, high, and premium) has rendered the tobacco price and tax measures less effective. It proposed merging the low and medium categories.
-
Report: BAT Kenya Has $28 Million Tax Discrepancy
Members of the Tobacco Control Research Group (TCRG) and The Investigative Desk claim to have found a $93 million discrepancy in revenue reported by British American Tobacco Kenya for 2017 and 2018, which would result in $28 million in missing tax revenue for the country. According to the report published by the University of Bath’s TCRG, government documents and data on cigarette consumption and prices found numerous contradictions, including “millions of cigarette packs unaccounted for, leading to [missing] revenues and therefore tax that would normally be expected.”
“In the absence of a convincing explanation, this looks like tax avoidance and potentially evasion,” Leopoldo Parada, Reader in Tax Law at King’s College London, said.
“BAT Kenya firmly rejects all the allegations made regarding the discrepancy between its published financial disclosures and data,” a spokesperson for the company said in a statement. “The company pays all taxes in line with applicable laws.”
The report authors have asked the Kenya Revenue Authority (KRA) if they will investigate, but have not yet received a response.
-
Korea: Vape Firms Evading Taxes
Image: Andrii Yalanskyi E-cigarette companies have been evading taxes by declaring false nicotine content when importing liquid nicotine base into South Korea, according to one of the country’s lawmakers, reports The Pulse.
The accumulated tax evasion is estimated at several trillion won.
Between January 2020 and July 2023, 20,197 kg of liquid nicotine base was imported, according to documents from the Korea Electronic Liquid Association obtained by Lim Lee-ja of the ruling People Power Party. Approximately 3,300 bottles of e-liquid can be produced with 1 kg of liquid nicotine. Each bottle is levied at KRW53,970 ($40.60).
Many e-cigarette companies have been mis-declaring tobacco leaf nicotine as tobacco stem and root nicotine to evade taxes since 2016, according to the association. Under Korea’s tobacco laws, nicotine extracted from tobacco stems and roots is not classified as tobacco.
Data shows that e-cigarette companies changed their declarations from tobacco leaf nicotine to synthetic nicotine when Korea’s Individual Consumption Tax Act was amended in 2021 to impose taxes on all tobacco-derived nicotine. Synthetic nicotine is classified as a simple commodity and not subject to taxes.
The association stated that annual distribution volume of Korean e-cigarette liquid is 30 million 30 mL bottles, with an estimated annual tax evasion of KRW1.6 trillion.
In 2019, the Board of Audit and Inspection audited the Korea Customs Service, the Ministry of Environment and the Ministry of Health and Welfare, showing that all the inspected imported nicotine was tobacco leaf nicotine. Falsified declarations have continued since then, according to the association.
Lim has called on the government to crack down on companies falsely declaring their products.
Liquid nicotine base is considered a hazardous substance under the Chemical Substance Control Act, regulated by the Ministry of Environment. Imports must be reported to the minister of environment, and companies must obtain an import declaration certificate for hazardous substances.
Those caught failing to report or falsely reporting the import of hazardous substances are subject to up to one year of imprisonment and up to KRW30 million in fines. None of the companies shown to have falsely declared nicotine products in past audits have been punished to date.