MTN to challenge Ghana’s $773 million tax bill

Barely a week after its Ghanaian subsidiary got slammed with a back-tax bill of around $773 million, there are strong indications that MTN Group won’t throw in the towel until it resolves the matter amid ongoing talks with the country’s authorities.

According to Reuters, Ghana Revenue Authority (GRA) had said the hefty fine — which comprises penalties for non-disclosure and interest charges — is for unpaid tax obligations for the years 2014 to 2018, claiming that MTN Ghana underreported its revenue by about 30% during the period, 

But in a statement issued on January 13, the parent company disputed the “accuracy and basis” of the assessment, which it said was conducted based on a new methodology to track call data records on the advice of a third-party consultant. The telecoms giant added it would fight the unpaid taxes claims.

“MTN Ghana believes that the taxes due have been paid during the period under assessment and has resolved to defend MTN Ghana’s position on the assessment vigorously. MTN Group and MTN Ghana will continue to engage with the relevant authorities on this matter and MTN remains resolute that MTN Ghana is a tax-compliant corporate citizen,” part of the statement read.

MTN will defend its position at all costs

Per Bloomberg, Ghana’s tax agency, in a statement on Monday, said its audit of MTN Ghana’s books adhered to “the principles of fairness and transparency”. The GRA said while the telecoms giant has received numerous tax compliance awards in the past, “these do not in any way prejudice the conduct of audits as required by law”.

However, Chief Executive Officer Ralph Mupita insisted that the GRA’s “methodology was applied retroactively” without prior notice, adding, “We strongly dispute this and will defend our position.”

Bloomberg reported that the South African company intends to commence a dispute resolution process should its ongoing talks with Ghanaian authorities prove abortive. According to Mupita, the network provider must pay 30% of the tax bill to trigger a conflict resolution process through Ghanaian courts unless an appeal to lower the amount is approved.

This comes at a time that Ghana grapples with its worst financial crisis in decades, with inflation hovering at a record 50.3 per cent, the highest in 21 years, according to Aljazeera. Between 70% to 100% of the government’s revenue is being pushed toward servicing the country’s humongous debt.

Related read: MTN continues 5G dominance in Africa with Zambia launch.

MTN’s regulatory woes aren’t new

Interestingly, this isn’t the first time the network provider would be enmeshed in a face-off with a regulatory agency in its African markets. In October 2015, the Nigerian authorities fined the company $3.9 billion after failing to disconnect 5.1 million subscribers — amid concerns terrorists were using the lines.

After a series of negotiations, the fine was reduced to $1.5 billion, out of which the company — Africa’s biggest wireless operator — paid more than three-quarters.

In 2018, MTN dragged the Nigerian authorities to court over the alleged illegal repatriation of $8 billion and $2 billion in tax evasion. Nigeria’s apex bank had ordered the company to refund $8.1 billion, which it illegally repatriated through improper Certificates of Capital Importation (CCI). But the Nigerian arm of the network provider described the allegations as “complex and misleading”.

The mobile operator also dealt with regulatory issues in Benin and Cameroon over the terms of its licenses. More recently, South Africa’s Advertising Regulatory Board (ARB) accused MTN of misleading customers with an advertisement offer following a petition by a disgruntled subscriber. Though the company offered some explanation in its defense, the agency found it guilty.

Read also: SA’s regulatory body accuses MTN of misleading customers with advert offer.