The Association of Rural Banks (ARB) has called on the government to consider reducing corporate tax for Rural and Community Banks (RCBs) from the current 30% to a range of 15–18%. This proposed tax relief is intended as a special incentive to promote the growth of rural economies and the broader national economy.
The National President, Mr. Eric Danin, reiterated the urgent need for the government to release locked-up funds owed to member banks at the Association’s 23rd Biennial General Meeting (BGM) and 5th Rural Banking Excellence Awards which was held in Kumasi on the theme ‘Building a resilient economy: The role of the rural and community banks’.
These funds, tied up due to the financial sector clean-up and the Domestic Debt Exchange Programme (DDEP), have significantly constrained the operations of Rural and Community Banks (RCBs). The Domestic Debt Exchange Programme has further worsened the financial strain on RCBs, as many were compelled to exchange high-yielding investments for lower-yield instruments, leading to reduced revenues.
Eric Danin emphasized that the proposed tax reduction would strengthen the financial capacity of RCBs, allowing them to expand operations, improve services, and better serve the needs of rural populations.
“We, therefore, humbly propose a revision of the corporate tax specifically to between 15 percent and 18 percent for RCBs as a special incentive to grow the rural economy and, by extension, strengthen Ghana’s economy for up to about 79 percent or more,” he said.
As it stands, a significant portion of the resources of RCBs is inaccessible due to government interventions in the financial sector. This situation has negatively affected the liquidity of these banks, limiting their ability to extend credit and provide other essential financial services to their communities.
He emphasized that timely action would strengthen the financial capacity of RCBs, boosting their contributions to rural economic development.
RCBs actively engage in CSR initiatives, providing critical support to underserved rural communities. These efforts often include funding education, healthcare, infrastructure, and other local development projects, which enhance social and economic well-being.
Lower corporate taxes would enable RCBs to reinvest more of their earnings into the communities they serve. This reinvestment could lead to increased access to credit for rural enterprises, enhanced financial inclusion, and sustained economic development in rural areas.
