Bangladesh’s government unveiled a technology-driven strategy to combat illicit tobacco trade as part of its FY2026-27 budget, aiming to strengthen tax enforcement, protect government revenue, and support public health goals. Central to the plan is a comprehensive Track and Trace system that will use AI-enabled cameras, automated production counting devices, and QR or AR-coded tax stamps to monitor tobacco manufacturing and distribution in real time. Finance Minister Amir Khosru Mahmud Chowdhury said tobacco taxation remains a critical tool for both revenue generation and public health, with the new measures designed to create a more modern, transparent, and technology-based VAT system while reducing tax evasion across the tobacco supply chain.
The proposal also includes a mobile app that allows the public to report illicit tobacco products directly to the National Board of Revenue, along with a whistleblower reward program to encourage reporting of smuggling and illegal sales. Additional measures include restricting cigarette and bidi paper imports to authorized manufacturers, imposing a 300% supplementary duty on cigarette filter materials and a 350% duty on nicotine granules and nicotine pouches, while raising minimum cigarette retail prices and setting maximum prices and excise duties for nicotine pouches and heated tobacco products. The government said the combined approach of digital monitoring, stronger enforcement, and higher tobacco taxes is intended to curb illicit trade, although estimates of Bangladesh’s illicit cigarette market vary widely, ranging from about 5.6% in an independent study to more than 18% according to industry estimates.