NBR chairman hints at raising tobacco prices

National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan has hinted at the possibility of increasing minimum cigarette prices to align them with those in neighbouring countries.
"Looking at the prices in other South Asian countries, we may reconsider the pricing because cigarettes are not available at such low prices in any of our neighbouring countries," he said at a pre-budget discussion at the Revenue Building in the capital's Agargaon on Monday.
He, however, clarified that there would be no further increase in taxes on cigarettes in the upcoming budget, noting that there was no scope for the tax rate to exceed 83 per cent.
At the discussion, NBR officials met representatives of seven organisations from  the cigarette sector.
The NBR chairman assured business leaders that some of their demands would be considered.
The National Cigarette Manufacturers Association called for a crackdown on illegal cigarette imports.
Representing the organisation, Sheikh Sabab Ahmed, group director of Abul Khair Group, urged the authorities to declare a "war" against illicit cigarette inflows.
In response, the NBR chairman said QR codes would be introduced on cigarette packs to help curb illegal trade.
A presentation by the association highlighted that illicit cigarettes accounted for nearly 15 per cent of the total market, raising concerns over revenue losses and weak regulatory enforcement.
Industry estimates suggest that more than 30 cigarette manufacturing factories are operating outside the tax net, producing over 18 billion sticks annually.
In addition, at least six tobacco cutting factories and four tobacco threshing factories are reportedly operating without proper oversight, contributing to the expansion of the untaxed segment.
As a result, the government is losing an estimated Tk 85 billion in revenue every year due to illicit trade.
British American Tobacco also identified illegal cigarettes as a major risk, while Japan Tobacco noted that Bangladesh was already among the countries with the highest tax rates on cigarettes globally, saying taxes should not be increased further.
Meanwhile, the Association of Mobile Telecom Operators of Bangladesh (AMTOB) called for the withdrawal of VAT on SIM replacement.
Its Secretary General Mohammad Zulfiqar said customers currently had to pay Tk 300 in VAT to replace a lost SIM, which effectively resulted in double taxation.
Earlier in the day, at another pre-budget discussion, the Bangladesh Steel Manufacturers Association (BSMA) placed its proposals before the NBR.
Presenting the proposals, BSMA President Mohammed Jahangir Alam said the country's steelmakers had been severely affected by high taxes, duties, and VAT.
The sector had faced multiple challenges in recent years, from the pandemic to global geopolitical tensions, he said.
Describing steel manufacturing as a capital-intensive sector, he sought policy support from the NBR.
He proposed reducing advance income tax (AIT) on steel raw material imports to Tk 500 per tonne from Tk 600.
He also recommended lowering tax deducted at source (TDS) on rod sales from 2.0 per cent to 1.0 per cent, setting turnover tax at 0.5 per cent instead of 1.0 per cent, and allowing adjustment or refund of advance income tax.
Bangladesh Paint Manufacturers Association (BPMA) President Mohsin Habib Chowdhury urged the NBR to withdraw the existing 10 per cent supplementary duty on paints and varnish.
"The imposition of the 10 per cent supplementary duty last year has taken a serious toll on the sector, which is largely dependent on imported raw materials," he said.
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