Universal Income Year For Companies in Bangladesh
With the formulation of the budget in the year 2015 by the Finance Act 2015, the government of Bangladesh has regulated that the Accounting period of companies (other than bank, insurance and financial institutions) shall have to be on a July-June basis. The measure will be in action from 1st day of July 2016. However the decision has been subjected to debates in recent times by entities who are questioning the plausibility of such requirement. Although the Finance Minister has not provided a definite answer to this question in his budget speech, fingers have been pointed to the budget formulation in Bangladesh. It has been pointed out by notable financial advisers and tax consultants in the country that formulation of the policy will help maintain homogeneity in the income of the government. As these companies shall be required to submit tax returns within December of every year, the government shall have enough time to predict its income more accurately while formulating its budget in the following year. This shall lessen the possibility of a deficit budget as well a revised budget which has become a common phenomenon in the country. However, there have been questions as to why Accounting Year and Tax year should be same as there are companies which would like to maintain their Accounting Year as per the management wish but who would also comply with the taxation deadline of December if the government so requires. This has been particularly raised by foreign investors in Bangladesh who would want to maintain their accounting period in accordance with the parent company abroad. A plausible reason is to maintain the comparability of Financial Statements for the public investors in the volatile share market of the country. However, it is to be kept in mind that such requirements may not be suitable for privately owned companies.
Moreover, entrepreneurs in the country have criticized such measure stating that it has not been implemented in the country uniformly. The governmental bodies have not been informed in an accurate manner as to how to close the accounts in a given accounting year- in that whether it shall be closed on an 18 months basis or a 6 months basis. Besides, the companies are required to report to the company house i.e. Registrar of Joint Stock Companies and Firms or the Securities Exchange Commission that the companies are changing the Accounting Year, albeit this being a policy enforced by the government and not the management.