MTN Group has encountered significant turbulence in one of its more important markets, Ghana, with tax authorities there claiming they are owed billions in unpaid taxes.
The Ghana Revenue Authority (GRA) has slapped MTN Ghana with a notice of assessment of tax liability along with a 21-day temporary withdrawal “to allow for further engagement”.
The rand equivalent of the assessment amount is R13-billion, including penalties and interest charges, MTN said.
“The base component of the assessment (that is, excluding penalties and interest), on MTN Ghana’s analysis, infers that MTN Ghana under-declared its revenue by approximately 30% over the audit period,” the group said in a statement published via the JSE after markets closed in Johannesburg on Friday.
“The GRA audited MTN Ghana for the period 2014-2018 and used a third-party consultant as well as a new methodology based on call data records (CDR), recharges and other data. MTN Ghana strongly disputes the accuracy and basis of the assessment, including the methodology used in conducting the audit,” the group said.
“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.”
Background
MTN explained that the GRA began an audit of MTN Ghana in 2019 with the “objective to give assurance on the reliability and completeness of revenues declared by MTN Ghana for the purpose of tax computation for the period 2014-2018. The GRA had not issued MTN Ghana with any prior guidelines and standards relating to the new CDR sequence-based methodology used for the audit.
“An initial tax assessment based on this new audit methodology was issued in May 2021 but was officially withdrawn by the GRA after consultations and discussions between MTN Ghana, MTN Group, the ministry of finance of the Republic of Ghana and the GRA. Following the withdrawal of the initial assessment, the parties agreed to an independent review by a global professional services firm. MTN Ghana has fully cooperated in this independent review, which was commissioned by the GRA in September 2021.
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“The independent review found that it was unable to support the conclusions reached by the GRA’s third-party consultants as the basis for the assessment.”
MTN said it will continue to engage with Ghanaian authorities. “MTN remains resolute that MTN Ghana is a tax-compliant corporate citizen.”
News of the tax claim comes as Ghana suffers its worst economic crisis in decades, with rating agencies downgrading the country’s sovereign debt to “junk” and the government turning to the International Monetary Fund for help. Ghana is also experiencing runaway inflation, now at above 50%/year. — © 2023 NewsCentral Media