British American Tobacco asked to pay Tk2,054cr in ‘evaded tax’

NBR has found evidence that BATB in 2016 evaded value-added tax (VAT) and supplementary duty of the said amount by concealing information, according to sources

The National Board of Revenue (NBR) has served a notice on British American Tobacco Bangladesh (BATB), asking the country’s largest tobacco manufacturer to pay Tk2,054 crore in “evaded tax”.

According to sources, the NBR has found evidence that BATB in 2016 evaded value-added tax (VAT) and supplementary duty of the said amount by concealing information.

After receiving the report of an assessment committee formed in this regard, the revenue authority issued a letter on 21 September, directing its Large Taxpayers Unit (LTU-VAT) to take legal action to recover the amount.

After receiving the directive, the unit wrote to BATB, asking the company to pay the amount, said an official at the LTU-VAT office.

BATB is the top tax payer as a single entity and listed with the LTU-VAT office for payment of VAT.

The company’s “tax evasion” came to the fore in 2018.

At that time, the officials of the VAT department found discrepancies between the information given to the NBR, and the information disclosed in the audit report regarding the company’s local leaf consumption.

Based on this, they found prima facie evidence that Tk2,054 crore of tax had been evaded.

After this, a committee was formed comprising VAT department officials and external experts.

Based on the committee report, the LTU-VAT in August 2021 issued the “final demand” under Section 55(3) of VAT Act 1991, stating that  the demand for Tk2,054 crore was not established. This went in favour of the BATB.

Three months ago, the NBR summoned the file again.

As per VAT Act 1991, any decision under Section 55(3) is deemed to be void if the file is summoned within two years of the decision being made.

After summoning the file, NBR constituted a committee headed by its member Md Shahidul Islam to examine the matter and asked it to submit a report within 30 days.

Quoting the committee report, the NBR in its directive to the LTU-VAT stated that while issuing the “final demand” under section 55(3), proper procedures were not followed.

The NBR also said that representatives of BATB sought 30 days’ time when they were called to the hearing of the committee through a letter.

But they agreed when they were asked to appear on 9 September citing time constraints. But on that date, no representative of the company showed up.

Two days later, the company said that it had filed a writ petition in this regard with the High Court.

Md Shahidul Islam, the head of the NBR committee, could not be reached over phone.

When this correspondent called BATB Managing Director Shehzad Munim for his comment, he did not answer. An SMS was sent to his WhatsApp about the content, and a comment was sought, but no response was received till the writing of this report.

Contacted, Wahida Rahman Chowdhury, who was the commissioner of LTU-VAT when the “final demand” was issued under 55(3), said,  “The first demand is not proved beyond doubt. The latest directive is not logical.

“I am not an expert. The final demand was made on the basis of the expert opinions from the Institute of Chartered Accountants of Bangladesh (ICAB).”

Source: The Business Standard
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Iram Hoque

Mohd. Iramul Hoque (Iram) completed his bachelor’s degree in Industrial Engineering in 2018 from Purdue University.

He joined Deloitte Consulting LLP as a Consulting Analyst based out of New York City having previously worked in similar roles at PricewaterhouseCoopers LLP & Landis+Gyr.

Iram left consulting and returned to Bangladesh to take up the family business. Realizing the opportunity in the capital market in Bangladesh, Iram worked relentlessly to found Columbia Shares & Securities Ltd in 2021.

Md Saiful Hoque

Md. Saiful Hoque received his bachelor’s degree in Civil Engineering from Columbia University in 1986 followed by a master’s degree from Texas A&M University in 1988. Upon completion of his Graduate Degree, he joined Gulf Interstate Engineering Company in Houston, USA serving as a Project Engineer.

He returned to Bangladesh in 1992 to join Columbia Enterprise Ltd., the family business of Shipping and Freight Forwarding services. In addition, he has built flourishing businesses manufacturing Garment’s Accessories and Fast-Moving Consumer Goods.