Shares in MTN Group tumbled on Monday morning trading in Johannesburg after the company said on Friday that it was facing a $773 million claim from Ghana’s tax authority.
MTN shares fell as much as 7.5% soon after the JSE opened on Monday. They were last quoted down 6% at R127.56/share from Friday’s close of R135.67.
The group said on Friday, after markets closed in Johannesburg, that the Ghana Revenue Authority (GRA) had slapped MTN Ghana with a notice of assessment of tax liability along with a 21-day temporary withdrawal “to allow for further engagement”. The assessment amount of US$773-million (R13-billion) includes penalties and interest charges, MTN said.
“The base component of the assessment (that is, excluding penalties and interest), on MTN Ghana’s analysis, infers that MTN Ghana under-declared its revenue by approximately 30% over the audit period,” the group said in Friday’s statement.
“The GRA audited MTN Ghana for the period 2014-2018 and used a third-party consultant, Safaritech Ghana Limited, as well as a new methodology based on call data records (CDR), recharges and other data.
MTN Ghana strongly disputes the accuracy and basis of the assessment, including the methodology used in conducting the audit,” it said. The company has there declared its intentions to context the assessment vehemently.
“MTN Ghana believes that the taxes due have been paid during the period under assessment and has resolved to defend MTN Ghana’s position on the assessment,” it said.
News of the tax claim comes as Ghana suffers its worst economic crisis in decades, with rating agencies downgrading the country’s sovereign debt to “junk” and the government turning to the International Monetary Fund for assistance. Ghana is also experiencing runaway inflation, now sitting at above 50%/year.
It is also worthy of not that the private consultant that conducted the assessment on MTN is Safaritech Limited, which holds itself out as an agent of the IMF.
Meanwhile, renowned audit firm, KPMG also did an independent assessment and its result was at variance with that of Safaritech but GRA has decided to go with Safaritech.
