South African Minister of International Relations and Cooperation, Dr Naledi Pandor has advised MTN to work closely with the authorities in Ghana to devise a solution regarding the GHS8.2 billion back tax liability.
Her admonishment comes after she was briefed on the tax liability dispute between the Ghana Revenue Authority (GRA) and MTN.
The GRA has, out of the blue, slapped MTN Ghana with a tax liability of over GHS8.2 billion based on a supposed tax assessment by a company called Safaritech Ghana Limited, which claimed that MTN Ghana hid 30% of its revenue from Ghana government between 2014 and 2018.
Following Safaritech’s claims, a very reputable auditing firm, KPMG also did an independent evaluation of Safaritech’s claims and found them untenable, but GRA has decided to stick with the work of Safaritech, even though that company has very shady records in London, Kenya and Ghana, and it’s claims to having links to Breton Woods institutions have still not been confirmed by any of those institutions.
MTN has disputed the claims and is currently in talks with GRA over it. The African telecoms giant and biggest taxpayer in Ghana has also sworn to resort to dispute resolution if the talks fail.
While urging MTN to cooperate with GRA for an amicable solution to the tax liability issue, the Minister noted that the feedback she has received from South African businesses and investors in Ghana indicates that there is discrimination against them as compared to how the rules are applied to business from other jurisdictions.
South Africa is one of the largest foreign direct investors in Ghana, mainly in mining, communication, beverages, retail and franchising, etc. These investments contribute to the Ghanaian gross domestic product (GDP) and job creation.
According to the Ghana Investment Promotion Centre (GIPC), there are over 100 South African companies registered and operating in Ghana, employing over 19,087 Ghanaians and 510 expatriates. Over the past ten (10) years, South African companies have undertaken over 170 projects in Ghana valued in excess of US$1,431,523,166 in capital investment.
Dr Naledi Pandor said she had previously held meetings with Chief Executive Officers of South African companies invested and operating on the African continent and they have reported an increasing number of difficulties ranging from: unfavourable market conditions and inconsistent regulatory frameworks, inconsistent tax regimes, repatriation of funds and delays in loan repayments.
“Of major concern is that competitors of South African companies from other parts of the world do not appear to be subjected to the challenges that South African companies are subjected to,” she observed.
These unfavourable conditions have led to disinvestment in some African markets by major South African companies such as: Shoprite, Game, Mr Price, Foschini, Woolworths, Tiger Brands, Sasol- Chemicals, Sasol-Gas, Group Five, Murray and Roberts, Metrolife Group, Telkom, Southern Sun, Protea Group, to name but a few.
The disinvestment has had a devastating impact on employment opportunities, poverty and inequalities in particular and GDP growth in general.
The Minister therefore called on the parties involved to do everything possible to find an amicable solution to these reported challenges.
“Our common destiny as outlined in the Agenda 2063 aspirations, depend on a win-win intra-African collaboration and cooperation,” she said.
She however gave assurance that the South African government is still committed to promoting increased South African investment in Ghana in particular and the continent in general.