MTN will use dispute resolution over R13-billion tax bill if talks fail

MTN Group CEO Ralph Mupita

MTN Group plans to start a dispute resolution process if talks with Ghanaian authorities over a surprise US$773-million (R13.2-billion) back-tax bill it received last week fail.

Before starting that process, the company is engaging with authorities to resolve the unexpected bill that came after the Ghanaian tax agency switched to a new methodology to track call data records based on the advice of a third-party consultant, Group CEO Ralph Mupita said Monday on an investor call.

“The methodology was applied retroactively” and without prior notice, Mupita said. “We strongly dispute this and will defend our position.”

The Ghana Revenue Authority sent the country’s biggest corporate taxpayer a claim for the period between 2014 and 2018 that implied MTN under-declared revenue by 30%, the Johannesburg-based operator said in a statement last week.

MTN Ghana’s audit adhered to “the principles of fairness and transparency”, Ghana’s tax agency said in a statement on Monday. While MTN has received numerous tax compliance awards in the past, “these do not in any way prejudice the conduct of audits as required by law”, according to the statement.

MTN’s row in Ghana is the latest legal and regulatory challenge it is facing in markets around Africa. Nigeria fined MTN $5.2-billion in 2015 for failing to disconnect unregistered phone lines, although the parties later settled for less than the initial bill.

Read: MTN vows to fight R13-billion tax claim in Ghana

In 2020, the operator successfully challenged a separate $2-billion claim for unpaid taxes by the Nigerian authorities. It’s also faced down authorities in Benin and Cameroon over the terms of its licences.

Read: MTN share price plunges on news of Ghana tax probe

MTN 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, according to Mupita.  — Loni Prinsloo and Moses Mozart Dzawu, with Yinka Ibukun, (c) 2023 Bloomberg LP

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