Income tax increment threatens survival of rural banks

The Association of Rural Banks have expressed fears that the increment in the Corporate Tax of rural and community banks is a threat to their survival.

The Corporate Tax on these banks was raised from eight per cent to 25 per cent which came into effect this year by the New Income Tax Act 2015 (Act 896).

Alhaji Abdul-Sharif Adams, the President of the Upper East Regional Chapter of the Association, said this at the 20th Anniversary and 16th Annual General Meeting of the Builsa Community Bank Limited (BUKO-Bank), held at Sandema in the Builsa District of the Upper East Region.

He stressed the need for the downward review of the tax to enable the banks to stay in business.

“The Council of Association of Rural Banks has requested the management of rural and community banks to submit the tax profile of their staff to enable the Council to intervene on their behalf,” he said.

He said another major threat that was likely to affect the operations of the banks was the Bank of Ghana’s mandatory minimum requirement of GH¢1,000,000.00 for rural banks for the 2017 fiscal year.

Alhaji Adams said most of the banks could not pay the GH¢500,000.00 mandatory minimum requirement of the Bank of Ghana for 2015, and that apart from the BUKO-Bank the rest of the rural banks in the region as well as the Northern and Upper West regions could not meet the requirement.

He commended the BUKO-Bank for its remarkable achievement and urged other rural and community banks in the three northern regions who are confronted with operational and administrative challenges to consult the BUCO-Bank to learn from its good initiatives.

Mr Zinzendorf Pascal Nkulenu, the Upper East Regional Manager of the Apex Bank, who read a speech on behalf of Mr Kwadwo Aye Kusi, the Managing Director of the bank, called on the management and staff to ensure that they placed premium on their clients so as to attract more customers.

The Board Chairman of the Bank, Naab Akanab Apoom-Weem, said in spite of the general economic challenges in 2015, the bank recorded a profit before tax of GH¢708,621.00 which represented a decrease of 86,432.00 (10.9 per cent) of the previous year’s performance.