MTN Group Limited, Africa’s largest wireless carrier, has revealed that a GH¢8.2 billion tax bill it received from the Ghana Revenue Authority (GRA) has been scrapped.
According to the Group, Ghana’s decision came after “extensive and productive discussions” during a 21-day negotiation period between the revenue authority and the mobile-phone operator.
The decision to withdraw the tax bill came after the Ghana Revenue Authority last month sent Ghana’s biggest corporate taxpayer a surprise claim for the period between 2014 and 2018.
Bloomberg Intelligence analyst, John Davies, stated that the potential fine represented about 5% of MTN’s market capitalization and the government’s decision “removes a threat to this year’s shareholder returns”.
The government has been demanding some of the nation’s largest companies to pay millions of dollars of back taxes.
Gold Fields Limited, Kosmos Energy Limited and Tullow Oil Plc have received similar bills. All of the companies dispute the government’s claims.
Ghana lost access to international capital markets because of its ballooning debt and loan-service costs. The government has been forced to allocate most of its revenue to service an estimated GH¢576 billion of public debt.
Due to this, it is restructuring most of its obligations amid a slump in the Cedi and is seeking a $3 billion loan from the IMF.
It will be recalled that Scancom PLC, owners of MTN Ghana, in January this year, pushed back on an alleged tax infringement placed on the company by the Ghana Revenue Authority (GRA) between 2014 and 2018.
The telecommunications company revealed it is a tax compliant corporate citizen and the tax liability notice of GH¢8,209,603,842.14 issued against it by the GRA is unacceptable. The assessment of GH¢8,209,603,842.14 includes penalties and interest charges.
In this regard, 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 percent over the 5-year period – 2014 to 2018.
The Ghana Revenue Authority (GRA) issued MTN Ghana with a notice of assessment of tax liability (the Assessment) dated January 10, 2023. MTN however explained it received the notice on January 11, 2023.
On January 13, 2023, GRA issued a temporary withdrawal of the Notice of Assessment for 21 days to allow for further engagements.
In a press statement issued, MTN Ghana welcomed the further engagement decision by the GRA to further assess the matter.
GRA notice of assessment of tax liability
The GRA audited MTN Ghana for the period 2014-2018, using a third-party consultant as well as 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 for the period 2014 to 2018.
MTN Ghana noted that 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.
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.
According to MTN, it is a responsible corporate entity with absolute commitment to transparency, good corporate governance, and compliance.
MTN Ghana and MTN Group prior to this stated that they will provide further information at an investor conference call.
READ ALSO: AGI Urges PURC To Maintain Tariffs For Beverage Sector Companies
