Explained: Why Ghana is accusing MTN of owing $773 million in taxes 

Scancom otherwise known as MTN Ghana announced on Friday that it had received a notice of assessment of a tax liability amounting to GHS8,209,603,842.14.

The amount when converted to United States Dollars is about $773 million and in Naira is as high as N343 billion.

The alleged tax outstanding emanates from an audit conducted for the assessment period 2014 to 2018. 

Why the allegation: According to Ghana’s GRA, the assessment was for an amount of GHS8,209,603,842.14 and includes penalties and interest charges for the 5-year period under review which it claims the telecoms giant under-declared.

MTN stated that the Ghana Revenue Authority (GRA) is alleging that Ghana under-declared its revenues by as much as 30% between 2014 and 2018.

The audit was conducted by a third-party consultant as well as a new methodology based on call data records (CDR), recharges, and other data.

MTN Ghana stated that it strongly disputes the accuracy and basis of the Assessment, including the methodology used in conducting the audit. 

MTN rebuffed the claims stating that the taxes have been paid in the period of assessment and that it will contest the charges levied against it by the GRA. 

How GRA taxes came about: According to a statement released by MTH, Ghanaian tax authorities conducted an audit of the financial statement of MTN in 2019.

In the audit, they sought to determine if the tax paid by the telecom giant was reliable and complete based on the company’s revenues. 

In conducting the taxes, the GRA claimed it used a methodology based on MTN’s call records data (CDR) and based on determined MTN had underpaid taxes.

Meanwhile, MTN retorted that it was not made aware of the CDR sequence-based methodology used for the audit. 

Soon after the result of the audit was communicated to MTN Ghana, the company 2021 met with the country’s ministry of finance and the GRA to address the allegations.

They then agreed to high a professional audit firm to conduct an independent review of the findings of the GRA.

Upon review, the professional firm stated that it was unable to support the conclusions reached by the GRA’s third-party consultants as the basis for the Assessment. Nevertheless, the GRA went ahead to slam MTN Ghana with the tax liabilities including interest payments.  

MTN Ghana results: MTN Ghana reported revenue of GHS 7,723,259,000 in 2021 up from GHS 6,033,428,000 in 2020.

Nairametrics review of Ghana’s results between the period 2017 and 2018 was GHS3.4 billion and GHS4.2 billion respectively.

The total tax paid on profits during the period was GHS262 million and GHS324 million respectively. 

MTN Ghana also reported in 2021 that it paid GHS2,767 million to the Ghanaian government in direct and indirect taxes, representing 35.8% of its total revenue.

Meanwhile, MTN Ghana had received numerous awards from the GRA for complying with taxes. According to MTN, they have been recognized on numerous occasions for their support of the GRA’s revenue mobilization efforts.

“The GRA has also satisfactorily concluded multiple tax assessments on MTN Ghana over many years and presented MTN Ghana with various taxpayer awards in recognition of its contribution to the fiscal development of the country.”

Ghana tax authorities have also responded stating that its audit of MTN Ghana “adhered to the principles of fairness and transparency.” It also stated that while MTN Ghana has received numerous tax compliance awards in the past, “these do not in any way prejudice the conduct of audits as required by law.” 

Not the first time: This is not the first time a company in the MTN Group has faced allegations of tax evasion from tax authorities of cash-strapped sub-Saharan governments.

Recall in 202 the Nigerian Federal Inland Revenue service slammed MTN with about $2 billion in tax liabilities, a figure that was eventually disputed by MTN. It led to an out-of-court settlement that led to a revocation. 

Our sources indicate MTN has learned from the experiences of engaging tax authorities in Nigeria which by many accounts has laid down a template Ghana is copying.