Bangladesh: A study reveals significant tax revenue losses linked to tax evasion by tobacco companies

A recent study has highlighted widespread violations of selling prices by cigarette companies in Bangladesh, resulting in a significant loss of tax revenue for the state.[1]. According to the results presented, if taxes were applied to actual market prices, the government would have collected approximately 51.82 billion taka (366 million euros) in additional revenue during the current fiscal year. This one-year assessment suggests that significant amounts of tax revenue have been escaping the system for several years due to irregular pricing practices by tobacco manufacturers and retailers.

Cigarettes sold above the official price

This research was made public at a meeting chaired by Dr. Syed Mahfuzul Haque of the World Health Organization (WHO) and jointly organized by the Bureau of Economic Research (BER) at Dhaka University and the Bangladesh Network for Tobacco Tax Policy (BNTTP). It brought together experts, representatives of tobacco control organizations, and journalists to discuss ways to reduce price manipulation practices in the tobacco industry.

Researchers collected data from 12 cities across four administrative divisions: Dhaka, Barishal, Khulna, and Mymensingh. The study focused on 48 retail outlets (four per city), located in public spaces. This methodology aimed to observe actual sales practices and discrepancies between the advertised price and the price actually paid by consumers.

In Bangladesh, most products are sold at the retail price indicated on the packaging. However, the study indicates that different prices are applied in the case of cigarettes and bidis. Manufacturers reportedly sell cigarettes to retailers at the official price, but the retailers then resell them to consumers at a price higher than that printed on the packs.

Previous investigations had already revealed that consumers were paying around 70 billion takas (495 million euros) extra per year due to these price discrepancies without the state collecting the corresponding additional taxes.

Field data presented by Ishrat Jahan Oishi, research assistant at BNTTP, shows that estimated tax evasion varies across market segments, ranging from 1.24 billion takas (8.7 million euros) to 26.21 billion takas (185 million euros).

These sums are equivalent to the annual budget of five medical universities, including Bangladesh Medical University. According to them, these resources could, for example, contribute to funding free treatments for heart disease nationwide.

Several expert recommendations to better curb these tax losses

The study makes several recommendations to strengthen controls on product supply. In connection with this specific case of lost tax revenue due to price-fixing violations, stricter controls on retail sales appear necessary, coupled with penalties for violations and legal action for past offenses. This requires strengthening tax collection and market surveillance through digital systems, as well as simplifying the taxation system.

Finally, the issue of selling single cigarettes, particularly to young people, encourages this type of practice while simultaneously undermining the effectiveness of health warnings on packaging. This loss of tax revenue is all the more problematic given that tobacco consumption itself entails a significant social cost.

A study by Johns Hopkins University indicates that, during the 2023-2024 fiscal year, public revenue from tobacco amounted to 400 billion Bangladeshi Taka (2.8 billion euros), while health and environmental costs reached 840 billion Taka (5.9 billion euros), more than double the revenue.

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[1]BDT 51.82 Billion in Tax Evasion by Cigarette Companies: Research Findings Released, Sushanta K Singha, published March 5, 2026, accessed March 9, 2026

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