Multinational companies are likely to be able to sell cigarettes in the country at prices equivalent to those manufactured by local companies from the next fiscal year (FY).
In the proposed budget for FY 2018-19, the government has removed the discrimination in the price slabs for sale of both local and international brand cigarettes.
In the outgoing fiscal, the government fixed Tk 35 as the price for low-segment international brands and Tk 27 for the same category of local brands.
The National Board of Revenue (NBR) had fixed the prices by issuing a special order.
But in the proposed budget for the next fiscal unveiled on Thursday, the NBR scrapped that provision.
The withdrawal of the provision has been given a retrospective effect, providing for exemption of tax that already fell due.
Now, the international cigarette company BATB will not have to pay around Tk 18 billion (1,800 crore) in Value Added Tax (VAT) arrears, said a senior NBR official.
The Large Taxpayers Unit (LTU) under the VAT wing, earlier, ordered the British American Tobacco Bangladesh (BATB) to pay the amount in unpaid VAT for FY 2017-18.
The amount fell due in unpaid VAT as the company had been selling every ten sticks of its cigarette at Tk 27 like the local companies, instead of Tk 35.
The company had done it defying the special order issued earlier.
Talking to the FE, BATB Managing Director Shehzad Munim said the government usually imposes any tax through a Statutory Regulatory Order (SRO), not through a special order.
"We are selling cigarettes at Tk 27 like local companies in the absence of an SRO," he said.
In the proposed budget, however, the government increased the price of every 10 sticks of cigarette of low-segment brands to Tk 32 from Tk 27 for both local and international companies.
Also, the Supplementary Duty (SD) on such cigarettes has been proposed to be raised to 55 per cent.
The price for the medium-segment cigarettes has been raised to Tk 48. The SD on them has gone up to 65 per cent.
The price of high-segment cigarettes has been hiked to Tk 75 (10 sticks).
But the price slab for another high-brand cigarette (Tk 101 for every 10 sticks) and the SD rate remained unchanged.
Also no increase in the price of bidi has been proposed in the budget.
Only the price of 20 sticks of 'filter bidi' has been raised to Tk 15 from the existing Tk 12.
The budget also proposed fixing the price of smokeless tobacco such as Zarda and Gul at Tk 25 for 10 grams.
The ex-factory price declaration for smokeless tobacco has been scrapped in the budget.
The government also proposed withdrawal of 25 per cent custom duty on tobacco products.
BATB MD Shehzad Munim thinks that increasing prices and tax on high-brand cigarette may encourage smuggling.
He said cigarette producers mainly use imported raw tobacco to export them.
Withdrawal of customs duty on tobacco export would not lead to increased tobacco cultivation, he added.
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