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MTN handed Sh200b tax bill in Nigeria

By Reuters | Published Thu, September 6th 2018 at 00:00, Updated September 5th 2018 at 21:31 GMT +3

Principal Secretary for ICT and innovation eng. Victor Kyalo cuts a ribon during the opening of MTN's State of -the artTier III data centre in Nairobi on Thursday 30th March 2017.MTN Business Kenya Managing Director, Kennedy Chinganya(left) and MTN Group Executive Head of Business Oliver Fortuin(right). [File, Standard]

MTN Group faces a $2 billion (Sh200 billion) demand for taxes in Nigeria, the latest in a series of skirmishes with authorities in the South African mobile phone company’s most lucrative but increasingly problematic market.

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The announcement of the tax bill incurred over the last decade comes days after the west African country’s central bank ordered MTN’s Lagos-based unit to hand over $8.1 billion (Sh810 billion) that it said was illegally sent abroad.

Mobile operator MTN disclosed it had been in talks with Nigeria’s Attorney General about an investigation into tax compliance in a statement outlining the background to the case of the money sent out of the country.

“In this process, his (the Attorney General’s) office made a high-level calculation that MTN Nigeria should have paid approximately $2 billion (Sh200 billion) in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years,” MTN said.

MTN, whose Nigerian business brings in a third of its annual core profit, or EBITDA, said its total payment of around $700 million (Sh70 billion) over the 10-year period fully settled the amount owing under the taxes in question.

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The latest demands come two years after MTN, Africa’s biggest telecoms company, agreed to pay more than $1 billion (Sh100 billion) to end a dispute with Nigeria over unregistered SIM cards.

Shares in MTN dropped 5.6 per cent to R81.95 (Sh531) as of 1250 GMT, bringing losses since last Thursday, when the central bank issued the $8.1 billion (Sh810 billion) demand, to nearly 25 per cent.

“These are old issues that have been investigated and closed but now they are being reopened,” said Byron Lotter, a portfolio manager at Vestact in Johannesburg.

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“I’m not surprised that a lot of people are selling and saying ‘these guys are just too volatile, I’m out’. I wonder if MTN are thinking the same.”

South African hotels and casino group Sun International said it was in final stages of exiting Nigeria following clashes with regulators and shareholders.

 


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