The Ghana Revenue Authority (GRA) has issued a massive GHS8.2bn (about R13bn) assessment including a penalty and interest, on Scancom (MTN Ghana), which the telecoms group has “strongly” disputed.
MTN Group -- has 285 million subscribers in Africa and the Middle East -- and said a third party review of the assessment did not support the GRA’s assessment. MTN Ghana is one of the biggest taxpayers in that country.
MTN is not a stranger to hefty fines in Africa, having agreed in 2020 to pay a $53m fine to Nigerian authorities who were reportedly unfairly shaking down foreign companies at the time because the country’s oil-reliant economy was ailing due to the falling oil price.
MTN also received an initial fine of $5.2bn -- later reduced to $1.6bn -- in 2016 for failing to disconnect about 5.1 million mobile subscribers with unregistered SIM cards in the country.
On Friday, the Ghana Revenue Authority gave Scancom (MTN Ghana) 21 days to discuss the tax authorities’ assessment, this after it initially issued the tax assessment, before temporarily withdrawing the assessment to allow for the 21-day consultation period.
“In this regard, 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,” MTN said in a statement 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.”
The GRA had started an audit of MTN Ghana in 2019 with the aim of providing assurance on the reliability and completeness of revenues declared by MTN Ghana for the period 2014-2018.
MTN said the GRA had also not issued MTN Ghana with any prior guidelines 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“An initial tax assessment based on this new audit methodology was issued in May 2021 but was officially withdrawn by the GRA after consultations and discussions between MTN Ghana, MTN Group, the Ministry of Finance of the Republic of Ghana and the GRA.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.”
MTN said 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.
The locally-headquartered international telecoms group said it and its Ghananian subsidiary would continue to engage with the relevant authorities on the matter and “MTN remains resolute that MTN Ghana is a tax compliant corporate citizen”.
MTN Ghana has been recognised on numerous occasions for its support of the GRA’s revenue mobilisation efforts.
The GRA had also satisfactorily concluded multiple tax assessments on MTN Ghana over many years, and presented MTN Ghana with various taxpayer awards, MTN said.
In the first nine months of 2022, MTN Group increased total subscribers by 6.8% to 285 million; the fintech business’s customer base rose 23.3% to 63 million; and fintech transaction volumes increased by a third to 9.5 billion.
MTN South Africa’s enterprise business service revenue grew 19.7%. The consumer postpaid business increased 4.2%. The rising cost of living and the impact of load shedding was felt most acutely in the consumer prepaid market, where service revenue grew by 0.4% in the period.
MTN Group’s listed subsidiaries in Nigeria, Ghana, Rwanda and Uganda in the third quarter of 2022 contributed to the overall increase of 14.3%, in constant currency, to R144bn in MTN Group service revenue; strong growth in data traffic and fintech transaction volumes. The Group’s liquidity position remained strong with cash and committed undrawn facilities of R59bn.
MTN Group’ s share price increased 1.16% to R135.67 on Friday.