MTN has informed shareholders that Ghana has backed down on a GHS8.2 billion (R11.7 billion, N312 billion) back-taxes claim, including interest and penalties.
Ghana temporarily withdrew the tax assessment to provide a 21-day timeline to allow for “further engagements” with MTN.
“Shareholders are advised that following extensive and productive discussions held during this 21-day period between MTN Ghana, MTN, and relevant authorities in Ghana, the [Ghana Revenue Authority] has on 3 February 2023 fully withdrawn the assessment,” MTN said in a statement on Friday.
“MTN would like to further assure Shareholders and other stakeholders of MTN Ghana’s commitment to the highest standards of tax compliance and responsible corporate citizenship,” the company said.
“MTN and MTN Ghana would like to thank all stakeholders involved for the support and collaboration to arrive at this amicable and mutually satisfactory full withdrawal of the assessment.”
South Africa Issued Warnings
The announcement comes after South Africa’s foreign affairs ministry weighed in on the dispute with a warning to the Ghanian authorities.
Naledi Pandor, the Minister of International Relations and Cooperation, said it was extremely concerning that South African companies were being targeted by governments like Ghana’s with exorbitant tax claims.
The Department of International Relations and Cooperation (Dirco) highlighted that South Africa is one of Ghana’s most significant investors, with interests in several industries, including mining, communication, retail, and franchising.
“According to the Ghana Investment Promotion Centre, there are over 100 South African companies registered and operating in Ghana, employing over 19,087 Ghanaians and 510 expatriates,” it said.
Dirco also said that South African companies have taken on more than 170 projects in the country — valued at over $1,431,523,166 (R25 billion) in capital investment.
It expressed concern that competitors of South African companies from other parts of the world do not appear to be subjected to the same “challenges”.
South Africa’s foreign affairs department then warned that such “unfavourable conditions” in other African countries have led to South African companies disinvesting from them, often with devastating consequences for the nation in question.
The potential fine represented about 5% of MTN’s market capitalisation, and the government’s decision “removes a threat to this year’s shareholder returns,” Bloomberg Intelligence analyst John Davies said in a note.
Ghana is Cash-Strapped
Ghana’s cash-strapped government has been demanding some of the nation’s largest companies to pay millions of dollars of back taxes. Gold Fields Ltd., Kosmos Energy Ltd. 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 576 billion cedis of public debt.
It is restructuring most of its obligations amid a slump in the cedi, and is seeking a $3 billion loan from the IMF.
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