Although its a priority of the Government to ensure tax revenue is adequate to fund priority development projects, the increase Corporate Tax for Commercial Banks to 45% was put through without proper consultation, and will in the long run, see commercial banks struggle with its services to customers.
That’s from Kina Bank Chief Executive Officer (CEO) and Managing Director Mr. Greg Pawson when highlighting the potential impacts on Kina Bank as a result of this increase in Corporate Tax.
“The reality is that we are a public listed company, and we rely on our shareholders to continue to invest, we re-invest our profits.”
“But we also at times reach out to them for more capital to invest, and to put that in perspective, the challenge we’ve got now is why would they invest in an organization that is paying half of their revenue in tax, that just makes no sense.”
Mr. Pawson said compared to other countries in the region, Fiji has a 15% Corporate Tax rate, Singapore 17% and PNG has 45%, which he said is among the highest in the world for a commercial bank to be paying.
“With it, defeats the whole underlying purpose of commercial banks contributing to the economic propensity of the country.”
“Potentially, interest rates will increase, and all concessional lending will stop and some of the investment that we’re planning to make, particularly regional PNG where those communities desperately need banking competition, won’t go ahead.”
Sadly, he said further down the line, other services the bank provides to customers would decrease, like financial inclusion and even the plans to extend the bank’s service to parts of the country, like opening new branches, would stop.
Pawson added this corporate tax increase was done without proper consultation with the banking sector in the country and as a result, this is now starting to impact the commercial banking services.
Despite all this, Kina Bank today announced its 2022 Full Year Financial Results, a Net Profit After Tax of K106.1million, which is an increase of 11% from the previous year. The CEO said the result reflects the Kina Bank’s continued commitment to the nation building program in Papua New Guinea (PNG).
Kina Bank provides banking and financial services to over 700, 000 people and lent over K300million this year, helping to support more Papua New Guineans open bank accounts, build new homes, start businesses and grow their prosperity. Mr. Pawson also added that over 300, 000 new customers also joined Kina Bank in 2022.