BACKGROUND: Globally, smokeless tobacco (SLT) poses significant health risks. In Bangladesh, 22 million adults use SLT (mainly Zarda, Gul, and Sadapata), contributing to serious health concerns. Despite generating BDT 51.64 crore in the 2020-21 fiscal year, SLT revenue is much lower compared to smoking tobacco's BDT 30,294 crore. Given higher number of SLT users, tax revenue from SLT should be proportionately higher, but tax evasion remains rampant in this unregulated market. This study explores tax challenges and evasion strategies in Bangladesh's SLT market, focusing on market dynamics, tax hurdles, and methods employed by SLT companies for evasion.
METHODS: The study utilized qualitative techniques, and conducted during August to October 2023 in Dhaka, Sylhet, and Mymensingh, focusing on high SLT consumption and production rates. It included structured observations of 120 SLT packets and 50 points of sales, alongside 20 IDIs and eight KIIs with stakeholders and experts.
RESULTS: The study findings revealed several significant challenges, including the prevalence of unregulated SLT companies and the apparent indifference from NBR. Duplicate companies and lack of valid addresses were also noted as contributing factors to market irregularities. Newer tactics for tax evasion, particularly involving small and poly packaging further complicate regulatory efforts. Inadequate monitoring mechanisms and regulatory gaps, combined with absence of a comprehensive list of NBR-registered companies, exacerbate the problem. The interviews highlighted additional concerns, including the use of false BIN numbers, misuse of licenses, and reliance on self-declaration for tax obligations. Participants also noted significant coordination gaps among authorities, which hinder effective oversight and enforcement in the sector.
CONCLUSIONS: To mitigate SLT tax evasion, implement standard packaging, enforce tobacco-selling licenses, and include Sadapata and loose-tobacco in taxation. National Tobacco Control Policy, digital taxation and tracking system, online VAT implementation, and specific company registration are essential to protect SLT tax evasion, promote public health, and revenue growth.