The Chief Executive Officer of the Ghana Association of Bankers, John Awuah, says government’s decision to place a 5% tax on banks’ gross profit is a rather unfortunate decision that will have adverse consequences on the banking sector in the country.
According to him, taking into consideration the great lengths banks in the country have gone to ensure that the country sails smoothly through the economic hardship occasioned by the novel coronavirus pandemic, a 5% levy on banks’ gross profit was not the reward the banking sector deserved.
Speaking on JoyNews’ Newsfile Saturday, John Awuah stated that “Over 4 billion Ghana cedis in loan have either been restructured, repayment stopped or repayment has been postponed. Some companies are getting as long as one year payment holidays.”
He said banks have been actively working to help the economic recovery process, thus, if there was a need to introduce such a levy, government should have consulted and negotiated with banks to find a more amicable solution instead of this 5% tax.
The CEO mentioned that the levy was only going to make the “banking industry unattractive in attracting private capital” and will adversely affect Ghana’s banking sector’s competitiveness on the international market especially following the commencement of the African Continental Free Trade Agreement.
According to him, should the 5% tax be allowed and implemented, Ghana’s banking sector will be the most taxed banking industry in the sub-region.
This would drive potential investors away, he said.
“We are gradually putting banks in Ghana on top of the tax industry that are heavily taxed. And if you were a private investor looking for opportunities in the sub-region to provide liquidity to the banks in Ghana which will have an effective tax rate of in excess of 35% or you look at Cote D’Ivoire which effective tax rate will be 25% or Nigeria which will be around 30%. So it also hampers our competitiveness on the international market,” he said.
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