MTN Ghana, Fined $773m Amidst Ghana’s Economic Downturn

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MTN Ghana, Fined $773m Amidst Ghana's Economic Downturn
MTN Ghana, Fined $773m Amidst Ghana's Economic Downturn

The Ghanaian branch of telecom giant MTN has been fined by the Ghanaian government for “deceitfully” underpaying its tax for four years. Ghanaian fined the telecom network $773m for allegedly under-declaring its revenue in Ghana by 30%.

This comes amidst news reports that Ghana’s economy is saddled with huge debts due to rising inflation and external debts. MTN noted that the back tax bill includes penalties and interest charges from 2014 to 2018, however, it believes, the necessary taxes were paid and no manipulation was made on their end.

MTN, which intends to contest these penalties in court, disclosed in a statement that “MTN Ghana believes that the taxes due have been paid during the period under assessment and has resolved to vigorously defend MTN Ghana’s position on the assessment,”.

While adding that Ghana Revenue Authority made use of a third-party consultant as well as a new methodology.

It disclosed saying “MTN Ghana strongly disputes the accuracy and basis of the assessment, including the methodology used in conducting the audit,”.

Although this is not MTN’s first rodeo with tax-evasion penalties and fines. In 2018, MTN Nigeria was accused by Nigeria’s Attorney General, Abubakar Malami of failing to pay $2bn in taxes and penalties which they contested in court and won, and the case was later withdrawn from the court in 2020.

Moreover, it is believed that this tax bill is Ghana’s reponse to a desperate need to fill its empty treasure as the countresponsery’s currency continues to take a downward turn. The country which ranked as the world worst performing currency in 2022, with an inflation of 54.1% would desperately need a lifeline to survive.

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Ghana also enacted an “interim emergency measure” which involves suspending payments of most of its external debts including Eurobonds as well as commercial loans and bilateral loans despite securing a $3bn financing agreement with the IMF.

While the country is employing other methods to tame its economic crisis, including buying oil products using gold instead of the U.S. dollar reserves so it can protect its foreign exchange reserves amidst an intense increase in the demand for dollars by oil importers.

With all these indicators on the country’s economy and the projected outlook for 2023 looking slow, it is believed that MTN Ghana is being used as a scapegoat with the back tax bill.

MTN, maintained a positive note in its statement, disclosing that it is working with Ghana’s Revenue Authority to have the issue resolved and the agency has begun auditing MTN Ghana’s business in 2019 to find “reliability and completeness” of the revenue declared during the said period, according to Bloomberg.

MTN also added that “The GRA hadn’t issued the unit with any guidelines or standards relating to its new audit methodology,”