Based on our extensive experience in conducting internal audits on behalf of Japanese companies in Bangladesh, this series provides basic knowledge that may be useful for those in charge of conducting internal audits in Bangladesh (internal auditors and auditors, management posted to Bangladesh, global business management at headquarters, and external auditors who need to conduct site visits as part of a group audit).The second session will introduce basic knowledge that may be useful for those audit firms that need to conduct site visits to Bangladesh sites as part of group audits.
In this second session, we will discuss statutory audit obligation, fiscal year, and tax year.
- Statutory audit obligation and obligation to submit audited financial statements to the authorities
- Unlike Japan, where accounting audit obligations arise according to size and public nature, in Bangladesh, all corporations, branches, and representative offices must prepare financial statements and have them audited by an accounting auditor, regardless of size or public nature.
- The audited financial statements must be approved at the Annual General Meeting of Shareholders (AGM), which must be held within six months of the end of each fiscal year, and must be submitted to the Registration Department within 30 days of the AGM.
Fiscal Year
There is no legal requirement for a fiscal year in Bangladesh, except for banking, insurance, and NBFIs (non-bank financial institutions), which are required by law to have a fiscal year from January 1 to December 31.However, many companies, including foreign companies, use the accounting period from July 1 to June 30 of the following year, which is both the fiscal year of the Bangladesh government and the statutory tax year.갰This is because all legal entities in Bangladesh (including local companies, branches of foreign companies, and liaison offices) are required to submit audited financial statements when filing their annual corporate income tax returns, and setting a different accounting period from the tax year would mean having to undergo audits twice in different periods.This is to avoid the hassle of having to undergo audits twice in different periods.
However, as described below, foreign companies can change their taxable period upon application to and approval by the National Board of Revenue (NBR), so that, for example, the taxable and accounting period can be from January 1 to December 31.
Tax Year (Taxable Period) and Tax Filing Obligations
The tax year in Bangladesh is generally 12 months from July 1 to June 30 of the following year, with the following exceptionsTax returns for income earned during this period must generally be filed by November 30 of the following year (within 5 months after the end of the tax year).
: Banks, insurance companies, and financial institutions are permitted to use the calendar year (January 1 through December 31) as their taxable period.
: If a subsidiary or branch of a foreign company needs to match the fiscal year of its parent company, it can apply to the National Board of Revenue (NBR) and obtain approval to adopt a taxable period that matches the fiscal year of the parent company.