Dhaka: Bangladesh’s National Board of Revenue (NBR) has uncovered evidence that Transcom Group allegedly evaded more than BDT 1.2 billion (approximately BDT 120.3 crore) in Value Added Tax (VAT), according to findings by the VAT Audit, Intelligence and Investigation Directorate. However, more than a year after the investigation report was submitted, no final decision has been reached, prompting concerns over delays within the country’s tax administration.
Officials familiar with the matter say the prolonged exchange of correspondence between the NBR’s VAT Policy Wing and the investigation directorate has stalled the recovery process, raising fears that the case could become entangled in legal and administrative complications.
Investigation Findings
According to sources, Transcom Limited obtained a VAT registration for its import and export operations using its South Kamalapur address. In September 2023, the VAT Audit, Intelligence and Investigation Directorate launched an investigation covering the company’s business activities between 2017 and 2022.
After nearly two years of investigation, a preliminary report was submitted on 10 April 2025, identifying significant VAT irregularities.
Investigators allege that while the investigation was ongoing, Transcom strategically amended its VAT registration by reclassifying its services as information technology (IT)-based services. This reclassification allowed the company to pay VAT at 5 percent instead of the standard 15 percent rate that investigators believe should have applied.
According to the investigation, this change reduced the government’s potential tax recovery to approximately BDDT 625.9 million (BDT 62.59 crore). Had the reclassification not occurred, the company’s total VAT liability would have exceeded BDDT 1.203 billion (BDT 120.3 crore).
The investigation also alleges that Transcom used an accounting category titled “Management Expense” in a manner that concealed taxable income. Investigators claim that despite its name, the account represented revenue rather than actual expenses and was allegedly used to reduce VAT liability.
Policy Opinion Delays Investigation
Following Transcom’s explanation, officials at the VAT Audit Directorate sought clarification from the NBR’s VAT Policy Wing regarding the correct VAT treatment of the disputed transactions.
On 23 December 2025, Director General Muhammad Zakir Hossain formally requested guidance on whether the “Management Expense” category should be taxed at 15 percent or 5 percent. A follow-up request was sent on 6 January 2026, but no definitive policy opinion has yet been issued.
The matter was reportedly discussed again during a virtual meeting on 5 July 2026, yet the investigation remains unresolved.
In a letter dated 6 May 2026, Director General Zakir Hossain stated that the relevant VAT Commissionerate would continue collecting VAT at the 5 percent rate until the NBR issues an official policy decision. Once that decision is received, the investigation report will be reviewed and any additional tax liability will be assessed accordingly.
No Official Response from Company Executives
Investigators sought comments from Simin Rahman, Chief Executive Officer of Transcom Group, via WhatsApp, but received no response. Abdullah Al Mamun, Director of Corporate Finance, also declined to comment.
Meanwhile, Md. Azizur Rahman, an official at the VAT Policy Wing, said he was not previously aware of the case. He added that if such issues arise, they are typically resolved through discussions among the relevant stakeholders.
Previous Allegations Resurface
The VAT investigation has also revived public attention surrounding previous controversies involving Transcom Group. Investigative journalist Elias Hossain previously published reports alleging irregularities involving the company’s assets, share ownership documents, and corporate governance. His reports also questioned the authenticity of certain documents submitted to the Registrar of Joint Stock Companies and Firms (RJSC) and raised allegations concerning the company’s management.
However, it is important to note that Simin Rahman and the other accused were acquitted in the share fraud case, meaning those allegations were not established in court. Nevertheless, the controversy has continued to attract public discussion.
With the emergence of the alleged BDT 1.2 billion VAT evasion, Transcom Group once again finds itself under intense public and regulatory scrutiny as tax authorities continue to deliberate on the final assessment.
Transcom’s Response
Transcom has rejected the allegations and provided a different interpretation of the disputed transactions. The company argues that the amounts recorded under “Management Expense” actually represent income from IT support services, which qualify as information technology services under Bangladesh’s VAT law. Therefore, it maintains that the applicable VAT rate is 5 percent, not 15 percent.
The company further states that it has already paid nearly BDT 67.5 million in VAT relating to the disputed period and that the relevant VAT Commissionerate accepted those payments without objection. Transcom subsequently requested the NBR to revise its original tax demand and issue a new assessment reflecting the lower VAT rate.