Bangladesh Association of Publicly Listed Companies has demanded restoration of calendar year as income closing year for all the companies to make it consistent with both local and international practices.
The current income-year of all companies, except banks, insurance, other financial institutions and multinational companies, is the financial year (July-June).
National Board of Revenue prescribed income-year, which ends on June 30, is causing various problems for the companies, BAPLC said in a letter to the then finance minister Abul Maal Abdul Muhith in November.
Officials said that Muhith forwarded the letter to NBR chairman Md Mosharraf Hossain Bhuiyan for examining the issue and taking necessary steps.
NBR also asked its income tax policy wing to examine the proposal, they said.
NBR through the Finance Act-2015 changed the definition of income year setting June 30 as uniform income closing year for companies, except banks, insurance, other FIs and MNCs, for the purpose of income tax returns submission and tax payment.
The income-year of banks, insurance and FIs is the calendar year (January-December) while MNCs set their own income-year in line with their parent companies’ income year.
‘The system of [financial year as income year] is inconsistent with global practices as well as not favourable for the listed companies,’ BAPLC said in the letter signed by its president Azam J Chowdhury.
All business transactions in the country close during the calendar year, it said.
Sourcing of raw materials, manufacturing equipments and services by the companies are also concluded on December 31, the last date of a calendar year, according to the association.
Besides, banks, insurance and leasing companies are operating based on financial closing on December 31, it added.
Companies are also unable to collect account receivable in a fiscal year as the vendors of the country follow 12 months calendar year starting in January and closing in December.
According to BAPLC, the fiscal year reporting also poses some specific problems for the companies.
Companies are unable to remain aligned globally impacting their earnings and expenditure due to the change of income closing date which also create problems in recording of their income and expenditure.
A listed company is also facing problems in getting audited balances of overseas subsidiary companies when it wants to close consolidated income statement and expenditure.
They are also unable to predict market dynamics as most business around the world fix and change price mechanism following calendar year, the letter stated.
Demanding restoration of old provision of income closing calendar year, BAPLC also said that NBR should allow the companies to practice as per the company’s respective articles of the association on the issue.
It also sent the copy of the letter to Bangladesh Securities and Exchange Commission and the Registrar of Joint Stock Companies and Firms.
Officials said that NBR in 2015 changed the definition of income year to bring consistency and introduce a uniform income year for tax purpose.
Previously, companies would follow their own income year which would cause difficulty in maintaining tax files of companies as well as collecting proper amount of taxes from them, they added.