Tax evasion cases by Chinese companies unearthed in Bangladesh

"Already suffering from a poor image in corporate ethics, Chinese companies have been found to be violating the laws of the land in Bangladesh causing loss to the exchequer," sources told IBNS.

Instances of exploitation of locals and corruption have often been reported in Chinese projects in Bangladesh.

Furthermore, Beijing has failed to act against the corruption and criminality that Chinese government-affiliated companies adopt not just in Bangladesh but in entire South Asia to gain an unfair advantage.

In December 2021, Bangladesh authorities discovered that a Chinese company China Road & Bridge Corporation (CRBC), a subsidiary of China Communications Construction Company (CCCC) engaged in the construction of road and bridges in Bangladesh was involved in tax evasion while importing construction material for government projects.

It was not the first time that Chinese companies had violated the Bangladeshi laws causing loss to the exchequer.

Earlier in December 2020, the BD revenue authorities had launched an investigation into ZTE Bangladesh, a subsidiary of the Chinese ZTE Corporation with many business operations in different sectors of the country, on the suspicion of tax evasion.

In the latest case, Chittagong customs officials exposed (Feb 2022) that Bangladesh based Chinese company Tianye Outdoor (BD) Co Ltd (TOCL), a subsidiary of Chinese company Comefly Outdoor Co Ltd has been involved in tax evasion and tax fraud to the tune of BD Taka 21 crore and 57 lakh.

TOCL is a Chinese owned company located at Rajshahi Division, Bangladesh and engaged in production and sale of camping tents, outdoor apparel and other supplies, textile and garment etc. During routine physical inspection, the BD officials recovered high duty foreign cigarettes from consignments which had been supplied to TOCL though TOCL had declared to ship cotton yarn from China (Desipro Pvt Ltd), source told IBNS.

In another case of tax evasion, a Chinese company called ‘Digit Anti Fake Company Ltd’ (DAFC) had supplied counterfeit bandrolls resulting in fraudulent tax evasion of over BD Taka 250 crore for Bangladesh.

It was also involved in printing 2 other counterfeit passports, ballot papers, national identity cards, birth registration certificates, etc.

It was detected that ‘bandroll’, a thin ribbon wrapped on bidi and cigarettes packets and supposed to be exclusively procured from the Bangladesh government by manufacturing companies, were being illegally printed by DAFC, based in Shenzhen.

With Bangladesh identifying corrupt Chinese business practices and also deciding to crackdown on them, China’s Belt and Road ambitions may face a setback.

Presently, there are nine active BRI projects in the country, including the mega Padma Bridge rail link project, Bangabandhu tunnel under the Karnaphuli River, and Dasher Kandi Sewerage treatment plant.

However, the success of such projects is said to be highly dependent on their economic viability and sustainable financing.

The functioning of Chinese companies has been under scanner in other parts of the world as well as multilateral financial institutions, especially the World Bank.

Though China portrays itself as a reliable economic partner, the country’s economic partnership appears to be fraught with malpractices.