The South African (SA) government has urged mobile operator, MTN and the Ghana Revenue Authority (GRA) to do everything within their power to settle amicably their tax dispute.

Dr. Naledi Pandor, the South African Minister of International Relations and Cooperation on Friday, January 27, 2023 urged the two parties, MTN and GRA to work closely with the authorities in Ghana to concoct a solution to the problem at hand.

The South African Government, through a media statement issued by the Department of International Relations and Cooperation (DIRC), showed its commitment to promoting increased investment in Ghana.

“The Minister calls on the parties involved to do everything possible to find an amicable solution to these reported challenges.”

“Our common destiny as outlined in the Agenda 2063 aspirations, depends on a win-win intra-African collaboration and cooperation”.
Media Statement, DIRC

Digging down into the situation which attracted foreign government attention, Scancom PLC, owners of MTN Ghana earlier on pushed back on an alleged tax infringement that was placed on the company by GRA between the periods, 2014 and 2018.

The telecommunications company refused to accept the tax liability notice of GH¢8,209,603,842.14 (US$773 million) given it by the GRA, adding that it is a tax-compliant corporate citizen of Ghana.

The assessment of GH¢8,209,603,842.14 includes penalties and interest charges, that MTN was supposed pay.

In light of this, from the base component of the Assessment (that is, excluding penalties and interest), on MTN Ghana’s analysis, the GRA inferred that MTN Ghana under-declared its revenue by more than approximately 30 per cent over the 5-year period – 2014 to 2018.

Pursuant to this, The Ghana Revenue Authority (GRA) issued MTN Ghana a notice of assessment of tax liability (the Assessment) dated January 10, 2023, which MTN said was received on January 11, 2023.

Background

On January 13, 2023, GRA issued a temporary withdrawal of the Notice of Assessment for 21 days to allow for further engagements.

In response to this, MTN Ghana, in a press statement, issued in Accra, same date of receipt of GRA’S notice, welcomed the further engagement decision to further assess the matter.

“MTN Ghana believes that taxes due have been paid during the period under assessment.”
MTN

To avoid any conflicts of interest, a third-party consultant was employed by the GRA to audit MTN Ghana for the periods 2014-2018, adopting a new methodology based on Call Data Records (CDR), recharges, and other data.

The audit which commenced in 2019 had the objective to give assurance on the reliability and completeness of revenues declared by MTN Ghana for the purpose of tax computation from 2014 to 2018.

MTN Ghana in opposition said it “strongly disputes the accuracy and basis of the Assessment, including the methodology used in conducting the audit.”

In May 2021, after consultations and discussions between MTN Ghana, MTN Group, the Ministry of Finance and the GRA, the parties agreed to an independent review by a global professional services firm which, MTN says it fully co-operated with in September 2021 under the auspices of the GRA.

“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.”
Release From Global Services Firm

MTN noted that the GRA had not issued it with any prior guidelines and standards relating to the new CDR sequence-based methodology used for the audit.

“In this regard, from the base component of the assessment; that is, excluding penalties and interest, on MTN Ghana’s analysis, the GRA infers that MTN Ghana under-declared its revenue by more than approximately 30% over the 5-year period 2014 to 2018.”
Release From Global Services Firm

Meanwhile, MTN Ghana declared its stance as a responsible corporate entity with absolute commitment to transparency, good corporate governance, and compliance.