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Uganda: Uganda says MTN is withholding taxes

14 August 2014   (0 Comments)
Posted by: Author: Samuel Mungadze
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Author: Samuel Mungadze (BDlive)

International telecoms operator MTN is one of five companies accused of withholding R118m in tax payments to the Ugandan authorities, despite the country agreeing to the dispute being settled by the World Customs Organisation.

Multinational companies are under increased scrutiny in Africa as countries struggle to build their modest tax revenue bases.

MTN and French-owned operator Orange were listed by Uganda’s auditor-general as being "in arrears", in his report for the financial year ended in June this year. The report said MTN and four other companies accounted for 78% of the country’s 37-billion Ugandan shilling tax arrears.

MTN Uganda CEO Brian Gouldie confirmed the continuing dispute on Tuesday.

The tax debt had been outstanding since July 2009, he said, when the company objected to its tax assessment and provided all the relevant information in defence of its position. "Consequently, the parties agreed to refer the matter to the World Customs Organisation for guidance."

Mr Gouldie said MTN had always been recognised as one of the most tax-responsible businesses in Uganda. "We meet all our tax obligations as required by law."

MTN had paid more than 2.2-trillion Ugandan shillings (R8.84bn) in taxes in Uganda in the past decade. Mr Gouldie said referring issues to the World Customs Organisation was a globally accepted avenue of settling tax disputes.

"The matter is therefore not an issue of tax evasion as it has been put before the World Customs Organisation and is awaiting feedback."

Mr Gouldie said all the tax disputes listed in the auditor-general’s report were deemed closed under the East African Community Customs Management Act.

In Kampala, however, it was being alleged that the dispute arose when MTN imported spare parts for its network. The Uganda Revenue Authority wanted to impose a tariff for a complete unit, which would have attracted a higher tax.

Mr Gouldie disputed this claim, saying that in customs matters, particularly when dealing with telecommunications equipment, "issues may occasionally arise leading to differences of opinion in classification, with the revenue authorities usually preferring a classification where they can maximise revenue collections".

He said the Uganda Revenue Authority had a mandate to carry out audits, as was the norm, and any difference of opinion was discussed and resolved during such audits. "Where the parties fail to agree on any particular classification, then the matter is referred to the World Customs Organisation for guidance."

The auditor-general’s report said: "The MTN debt has been outstanding since July 2009 as it was objected to and referred to World Customs Organisation. Orange case was pending hearing."

This is the second time that MTN has had a dispute with the authorities in Uganda. Two years ago, MTN CE Sifiso Dabengwa and eight other company directors were summonsed to appear before a Ugandan court on charges of tax evasion, based on allegations made by a former MTN Uganda employee.

A Ugandan judge later declared the criminal summons null and void and MTN subsequently brought criminal charges and a civil claim against the former employee.

Uganda Revenue Authority spokesman Herbert Ssempogo said on Tuesday that the authority required more time to reply to questions about the auditor-general’s report comprehensively.

MTN has 9.9-million subscribers in Uganda. Last week, the company’s interim results showed that overall revenue grew 10.7% to R72.76bn during the six months ended June.

This article first appeared on bdlive.co.za.



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