The National Board of Revenue (NBR) has found serious irregularities with the B&B Food and Beverage, a foreign company operating in the country, as the company is involved in duty evasion, income tax evasion, and money laundering, a source said.
Customs Valuation and Internal Audit Commissionerate (CVA) has initially detected this dodging through an audit, he said.
B&B Food is continuing its fraudulent activities with collaboration of its’ local agent, International Distribution Company Bangladesh Limited (IDCBL).
CVA is likely to conduct a re-audit on all the financial documents of both the mother and subsidiary companies, including their audited financial report, income tax return, and banking transactions, the source said.
According to the CVA audit, the company dodged duties and VAT by several unscrupulous means including, under invoicing, hiding the information of original manufacturer, excessive value addition, and hiding the actual transactions.
The CVA source said, after reviewing the duty assessment reports of B&B’s imported goods, they found a serious mismatch between its maximum retail price and the imported price (including all duties). International Distribution Company, as the subsidiary company, is supplying its products in local markets adding more value (90 to 2019 percent) against the imported price but it did not pay VAT in accordance with such supply price.
The source also said B&B in 2017 imported Nivea branded 4.8 gram Lip Care for which it had cost Tk 7.18 per item, but the company is selling the same product in the retail market at Tk 158, after an uneven value addition.
The CVA source said B&B, on intent of money laundering, kept the real address of original exporters concealed, which is a serious violation of the import procedure. Instead, the company mentioned the name of a third country, which was fake, to conduct import activities.
The CVA also found a big accounting gap between the core company and the subsidiary company, giving enough evidence of a serious fraudulence, the source said.
In 2017, the B&B showed an account that it had spent Tk 48.33 crore as import cost while IDCBL showed its local purchase cost was Tk 25.35 crore, the source claimed.
As the IDCBL supplies all the products of its mother company at local markets, the B&B’s selling cost and the subsidiary’s local purchase cost must be equivalent, the source also said.
The subsidiary company thus evaded Tk 1.1 crore in VAT as it showed Tk 22.98 crore less against its actual local purchase cost.
Hence, the IDCBL, by not providing the Mushak-11 chalan against its sales at wholesale and retail markets along with false declaration about import cost and local purchase cost, evaded Tk 4.62 crore in VAT in 2017 as the company showed its sale Tk 30.8 crore less against the actual amount of Tk 65.34 crore.
In the meantime, they also dodged Tk 10.8 crore in income tax, the source said.
Tax officials concerned fear that the company might be involved in money laundering along with dodging a huge amount of tax.
The local businesses, due to this fraudulence, are facing an uneven competition in the market, which may cause their businesses to shut down.
So, the exchequer should take stern actions against the company after finalising their conclusive audit, the CVA official concerned said.
Tk 16.5 crore in tax dodged
Money laundering symptom also apparent