The survival of operations of rural banks in the country continues to be threatened by the 25% corporate tax which came into effect last year by the Ghana Revenue Authority.
Players in the rural banking industry are therefore asking government to consider reducing the current rate, since it will affect the services they render to their numerous customers.
Speaking to Ultimate Business on the sidelines of the 33rd Annual General Meeting of Atwima Mponua Rural Bank, Friday at Toase, the Managing Director, Issa Mogtari, said the bank’s profit after tax in 2016, was adversely affected by the increment of the corporate tax from 8% to 25%.
Atwima Mponua Rural Bank in 2016 paid corporate tax of Ghs345,612 as against Ghs107,630 in 2015.
“Originally the 2015 corporate tax was calculated on 8% on the profit after tax prior to the declaring of the 2015 dividend. The bank was compelled to pay the deferred tax difference of 17% for 2015 in 2016, translating to 42% tax in 2016, thus drastically reducing the profit after tax.
“When you look at the corporate tax moving from 8% to 25%, a percentage of almost 212.5%, it is just too much. It is really affecting us because it is reducing the amount of dividends that would have gone to our shareholders.
“If the tax is not reduced downwards it will continue to kill some of the rural banks. The more you deprive shareholders of their rightful dividends, it is not going to attract anybody to put in more money to buy shares again and make our shares unattractive”, Mr. Mogtari mentioned.
The Atwima Mponua Rural Bank MD further hinted that “apart from that we’re into corporate social responsibilities and it is now going to prevent us from doing more of the social responsibilities because we cannot pay tax up to 25% and still be able to maintain what we used to do.”
Despite the general difficult economic conditions which resulted in reduced purchasing power of customers, high tariffs and demand from labour unions to increase salaries and improved conditions of service of workers, Atwima Mponua performed creditably, according to figures in its December 31, 2016 financial indicators.
For instance, total investments was pegged at Ghs17,548,529, against Ghs13,150,588 in the 2015 financial year. Total deposits increased from Ghs33,419,227 in 2015 to Ghs38,613,218, in 2016 showing a variation of 15.54%.
Atwima Mponua Rural Bank is a limited liability company incorporated under the Companies Code 1963 (Act 179) and licensed by the Bank of Ghana under the Banking Act 1963 (Act 339), authorized to provide financial assistance to merchants, smallholder farmers, industrial residents and offer other unique products and services.
Source: Ghana/Starrfmonline.com/103.5FM/Patricia Ama Bonsu
