The key budgetary measures on tobacco taxation has remained unimplemented even after two and half months of adopting it in the national budget for the current fiscal year 2017-2018 due to legal complexities and difference of opinion between the tax authorities and British American Tobacco Bangladesh.
Large Taxpayers Unit under the value-added tax wing of the National Board of Revenue could not collect supplementary duty in line with the budgetary measures from the BATB since July 1, 2017 as the company has been denying paying the tax questioning the legality of the measure.
In this context, the LTU (VAT) has sought directives from the revenue board whether it will issue demand notice to the company claiming the arrears, officials concerned has told New Age.
They said the LTU had also sent several letters to the BATB to comply with the budget measures but the company declined to do so referring legal issues.
The arrear amount could be more or less Tk 200 crore in the first two months and is increasing with the time, the officials said.
The NBR in the budget set the price slab at Tk 35, increasing from Tk 23, for low-quality international brand cigarettes (per 10 sticks) produced and sold by the multinational companies in Bangladesh as well as in other countries and imposed 55 per cent SD through issuing a special order.
On the other hand, the price has been set at Tk 27 for per 10 sticks of low-quality local brand cigarettes produced in the country and are sold only on the local market and imposed 52 per cent SD.
The price slab, on which SD is imposed, was uniform at Tk 23 for per 10 sticks of cigarette for both local and international companies.
The move was taken to protect local manufacturers from imbalanced competition with the international company as the BATB grabbed almost 60 per cent of market share of low brand in just nine years after entering in low segment cigarette business.
But, the BATB has been denying paying the tax on additional portion of price
difference between the company and local manufacturers arguing that, as per law, the revenue board cannot impose tax through special order, an NBR official told New Age on Tuesday quoting the BATB position.
The BATB is paying the tax calculating the price at Tk 27 like local companies though the tax measures for them came into effect from July 1.
Tax can be imposed through issuing statutory regulatory order which requires vetting of the law ministry, he said.
Sensing the problem, finance minister AMA Muhith in his final budget speech proposed that the problem be settled through issuing an SRO.
Muhith, however, said that the budgetary measures would remain effective until the SRO is issued.
The LTU could not collect the duty as the NBR is yet to issue the SRO, said the official.
The BATB has also claimed that the measures also contradict with the Foreign Investment Protection Act-1980 that prohibits discrimination in taxation for local and foreign companies.
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