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MTN Ghana denies tax evasion charges

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MTN has denied it is evading its tax and social responsibilities in Ghana, stating it was the top taxpayer in Ghana in the past three consecutive years.

MTN paid a total of $172.1 million in taxes in 2007, with 2006 payments adding up to $127 million, and 2005 taxes coming to $103 million, says Mawuena Azo Dumor, MTN Ghana's corporate services executive.

The denial follows a statement by Solomon Abam Quaye, the district chief executive of the Awutu-Senya region. He alleged that telecoms companies operating in the districts were evading their tax and social responsibility obligations, which resulted in low revenue generation.

Quaye named MTN, Tigo, One Touch and Kasapa as those refusing to pay up.

Modern Ghana reports that Quaye's office "met with the companies to prevail upon them to pay their taxes, but to no avail; and that - apart from MTN, which has paid something small - the rest have refused to pay".

"He said letters and bills have been sent to the companies informing them about the need to pay their taxes to the assembly, but none had responded. Quaye called on the companies to pay up their taxes and that the assembly would have no option but to take legal action against them," the report says.

Breaking it down

Dumor says MTN Ghana's payments included withholding tax, value-added tax, pay-as-you-earn taxes and custom duties.

MTN's 2007 tax payments included $8 million in withholding tax, $43 million in value-added tax, $0.9 million of pay-as-you-earn taxes and $5.5 million in custom duties, she says.

These figures represent payments outside of property rates for telecommunications cell site roll-outs and other fees charged by local government assemblies as operating fees, Dumor adds.

"It is clear that the district chief executive [DCE] unfortunately is unclear about the difference between corporate taxes, local government property rate/operation fees and corporate social responsibility investments," she says.

Fragmented regime

Dumor concedes there have been challenges with standardising the tax payment regime in Ghana.

However, the industry is working closely with the regulators and the sector ministry to address those disparities, she says.

"Operators were recently informed at a meeting with the honourable minister for communication that a directive had been sent to the various local government assemblies that this standardisation process would be addressed within the next one month time frame."

In the interim, further payments were to be deferred, she adds. The deferred payments are probably the fees cited by the DCE, which he erroneously called "taxes" in the corporate sense, she says.

Corporate social responsibility

Dumor also contends that MTN has invested heavily in social responsibility initiatives in Ghana.

Scancom Ghana donated $20 million to the Ghana Water Company, and MTN provides educational scholarships to about 400 students, she says.

In addition, MTN has committed $600 million towards the refurbishment of the country's major referral centre for all maternal health cases, she points out.

Damage control

Dumor says the Ghanaian Ministry of Communications has noted the publication of the tax evasion allegations, and supports efforts to ensure the DCE is acquainted with the relevant distinctions.

The government also supports MTN's view that property rates and operating fees are separate from corporate taxes, as well as social responsibility, she says.

"MTN is making efforts to engage with the DCE to clarify his comments and the company is aware that other operators that were also mentioned in the article are doing the same."

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