Alcohol Tax Drives Revenue Growth

Do you know which imported product carries the highest duty in Bangladesh? The answer is alcohol and beer. These products require permits to import, face strict regulations on sales, and can only be consumed under specific conditions. They are subject to more than 650 percent duty. Additional supplementary duty and VAT are also applied.

In other words, a product priced at Tk 1,000 faces 600-700 percent import duty, followed by 39 percent supplementary duty and 15 percent VAT, pushing the final taxable value to around Tk 10,000. No other product in Bangladesh is subject to such an unusual tax structure.

Alcohol imports and consumption in the country are strictly controlled and conditional. Alcohol cannot be consumed publicly except in licensed bars. It also cannot be brought in freely as baggage by travelers. Even drinking in public places outside approved bars can lead to legal action.

Despite these strict regulations and high duties, legal alcohol imports have increased, boosting government revenue. In the first five months alone, the government earned Tk 3 billion in revenue from alcohol imports. By the end of the year, total revenue is expected to exceed Tk 7 billion.

However, there is a contrasting narrative in the market. Due to high duties, smuggling remains widespread. A large portion of alcohol and beer sold in hotels and bars across the country enters through illegal channels, as sustaining the business under such high import costs is considered nearly impossible.

Hakim Ali, Managing Director of Hotel Agrabad in Chattogram, widely known as a pioneer in the country’s tourism industry, said, “More alcohol is entering hotels, motels, and bars through smuggling than through legal imports. In Kolkata, a beer sells for $1 to $1.5 (Tk 125), while in Bangladesh it sells for $10-$15. That is why the yaba trade is thriving in Bangladesh. There is no yaba in Kolkata. If the government rationalizes the tax structure in this sector in the interest of tourism and entertainment, it will increase revenue and also help stop yaba consumption among the younger generation.”

Import data from the National Board of Revenue (NBR) shows a rising trend. In January 2026, alcohol spirit imports stood at 88,500 liters. By May, this increased to 105,000 liters. Beer imports rose from 145,000 liters in January to nearly 200,000 liters in May. Compared to January, alcohol spirit imports increased by about 18.64 percent in May, while beer imports rose significantly by 37.93 percent.

The main consumers of imported alcohol in Bangladesh include foreign officials working with international development agencies, expatriate staff involved in major infrastructure projects, corporate executives, and some foreign tourists. In addition, medium- and high-income professionals and businesspeople also form part of the customer base.

Shubhradev Mondal, Assistant Commissioner of Customs at Chattogram Airport, said imports through legal channels have increased due to stricter controls on smuggling routes and false declarations. Under baggage rules, foreign passport holders can bring in one liter of alcohol, while Bangladeshi passport holders are not allowed this facility. Any alcohol brought in illegally is confiscated, he added, noting that demand is now being met through legal imports.

From January to May 2026, a total of 1.276 million liters of various brands of liquor and beer were imported over five months. The customs-assessed value of these imports stood at Tk 5.5 billion. Of this, 476,000 liters were alcohol spirit valued at around Tk 5.3 billion, while 800,000 liters were beer valued at Tk 1.8 billion. In total, goods worth Tk 12.5 billion were imported, on which duties will be applied. Alcohol imported under diplomatic quotas remains duty-free.

Against this backdrop, the Bangladesh Hotel, Restaurant and Bar Owners Association has proposed reducing import duties on legal alcohol by one-third in the upcoming budget. It has suggested cutting beer import duty from 442 percent to 150 percent, and reducing taxes on brandy, whisky, rum, gin, vodka, and other liquors from 611 percent to 200 percent.

The association argues that lowering duties would reduce illegal alcohol imports, increase legal imports, and boost government revenue. However, the National Board of Revenue (NBR) said that while revenue considerations are important, religious and social impacts must be prioritized before any decision is made.