Value-added tax (VAT) growth from Bangladesh's cigarette sector has sharply deteriorated by 86 per cent following the transfer and subsequent removal of a senior National Board of Revenue (NBR) official who led a nationwide crackdown on illegal tobacco trade, according to revenue data and officials familiar with the matter.
The decline comes months after the transfer of a senior NBR official from his post despite overseeing what officials describe as one of the most successful anti-illicit tobacco enforcement drives in recent years.
Between July and September 2025, the officer directed more than 13,000 enforcement operations across the country targeting illegal cigarette syndicates. Revenue officials say the campaign significantly reduced the availability of illicit cigarettes, boosted legal sales, and contributed to a substantial rise in VAT collections.
Data shows that VAT revenue from the cigarette sector recorded 102 per cent growth during the first quarter of fiscal year 2025-26, generating an additional Tk55.83 billion. During the July-October period, VAT collections from cigarettes reached Tk 146.67 billion compared with Tk85.08 billion during the corresponding period a year earlier, representing a 72 per cent increase.
However, he was transferred on October 7, 2025. On the same day, the Anti-Corruption Commission (ACC) filed a case against him based on an anonymous complaint originally lodged in 2018. According to officials, the allegations had previously been investigated in 2019 and no evidence was found. Shortly afterward, he was designated as an Officer on Special Duty (OSD).
Revenue figures suggest a marked reversal following his departure.
Over the subsequent seven months, VAT collection from cigarettes declined by Tk4.22 billion, while growth slipped into negative territory at minus 1.58 percent. By May 2026, monthly growth had fallen further to minus 25 per cent.
Officials attribute the downturn partly to a resurgence in illicit cigarette trading. Internal estimates indicate that illegal cigarette markets expanded by 31 percent over the past six months, eroding gains achieved during the earlier enforcement campaign. Overall VAT growth from the cigarette sector has fallen from 72 per cent to 16 per cent.
Several VAT officials, speaking on condition of anonymity, said the trend demonstrates the effectiveness of sustained enforcement. They argued that illegal operators retreated under intense scrutiny but quickly regained market share after enforcement weakened.
Beyond anti-smuggling operations, the official also pursued reforms aimed at reducing tax leakage, expanding VAT coverage, and strengthening technology-based compliance systems across sectors including e-commerce, wholesale, and retail trade. In August 2025, his team uncovered an alleged Tk4.51 billion tax evasion scheme involving a tobacco company.
Revenue records further show that cigarette-sector VAT growth reached 394 per cent in July 2025, 173 per cent in August, and 102 per cent in September. By November, one month after his removal, growth had slowed dramatically to just 0.4 per cent.
Colleagues describe him as an officer who resisted pressure from powerful vested interests linked to illicit tobacco networks.
Some officials believe his uncompromising stance may have contributed to his removal.
According to officials familiar with internal communications, the NBR chairman, in a message dated August 30, 2025, described Belal Hossain Chowdhury as a "clean officer" and acknowledged that his actions against illegal tobacco syndicates had made him a target.
As illicit trade regains ground and VAT growth weakens, pressure is mounting on the government to strengthen oversight in one of the country's largest revenue-generating sectors.
