Banks in the country going forward are expected to pay 5 per cent of gross profits to government.
The new directive contained in the 2021 Budget Statement and presented to Parliament on March 12, by Minister for Parliamentary Affairs, Osei Kyei Mensa-Bonsu, is to help defray outstanding commitments – locked up funds – in the financial sector.
Government, in August 2017 commenced a clean-up exercise of the financial sector which led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, two non-bank financial institutions and the revocation of the licences of 53 Fund Management Companies (FMCs).
According to government, aside restoring confidence in the financial sector and protecting savings of Ghanaians running into millions of cedis, it has spent in excess of Ghs 21 billion in refunds of monies to customers of the collapsed banks, FMCs and other financial institutions.
Presenting the budget, Mr Kyei Mensa-Bonsu opined that government will no longer be in the position to defray the remaining costs in the sector as government intends to employ strict expenditure measures this year, hence the introduction of the 5 per cent financial sector clean-up levy which will be charged on the gross profit of banks (5 per cent on profit-before-tax).
The introduction of the new levy can have dire consequences on both banks and Ghanaians as it could increase the cost of credit from banks since banks might want to partially or wholly pass the new tax charge to their clients.
Aside that, the new tax will definitely reduce the profit margin of banks in the country.
The new levy, as pointed out by Mr Kyei Mensa-Bonsu during the presentation of the budget, will however be reviewed in 2024.
