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Breaking!! MTN Caught Avoiding Tax With Phantom Companies In Dubai, Mauritius!!! - Politics - Nairaland

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Breaking!! MTN Caught Avoiding Tax With Phantom Companies In Dubai, Mauritius!!! by citizenisb: 1:43pm On Nov 09, 2015
South Africa's deputy president Cyril Ramaphosa--long seen as the most likely next successor to president Jacob Zuma--has seen his name caught up in another corporate tax dodging allegation, this time with Africa's largest mobile phone company MTN.

Last week Friday, amaBhungane, an investigative journalism organization, and Finance Uncovered, a global network of journalists, published a story alleging that Africa's largest mobile network, MTN, was involved in shifting millions of dollars from its subsidiary companies in Nigeria, Uganda, Côte d'Ivoire and Ghana to companies in Dubai and Mauritius in order to avoid its tax obligations. This all happened under Ramaphosa's watch, as he was chairman of MTN's board of directors, between 2001 and 2013.

In September last year, South Africa's Mail and Guardian reported that Lonmin--a mining company which Ramaphosa was a board member of between 2010 and 2013--was involved in a scheme to move profits generated from its platinum mining activities in South Africa to Bermuda.

While Ramaphosa, one of South Africa's richest men, has taken a strong public stance against tax avoidance as deputy president it doesn't seem to be in tune with his former life as a captain of industry. It is also causing a revision to the expectation that he is next in line when Zuma's term ends in 2019.

According to the report, MTN subsidiary companies in Nigeria, Uganda, Cote d'Ivoire and Ghana paid "management fees"--which according to MTN cover for elements like back office support, technology transfer (to subsidiary companies) and use of the MTN brand.

While it is common for telecom companies to charge their subsidiaries management fees--as MTN itself argues in a response to a set of questions asked by the investigative team--the bone of contention is whether the large sums of money flowed to "real offices staffed with people doing actual work to earn the money
" as the investigative report states.
Re: Breaking!! MTN Caught Avoiding Tax With Phantom Companies In Dubai, Mauritius!!! by citizenisb: 1:47pm On Nov 09, 2015
The reporting team discovered MTN revenue producing companies operating in Ghana, Nigeria, Uganda and Cote d'Ivoire made substantial payments to offshore companies in Dubai and Mauritius. These payments were counted as a cost of business for the operating companies, lowering their profits and potential tax bill.

The enormous sums were purportedly for management and technical services performed on behalf of these companies, as well as royalty payments for the use of the MTN brand. In Ghana, these payments accounted for more than 9% of the turnover of the company.

African journalists in Ghana, Nigeria and Uganda working with Finance Uncovered discovered that 55% of management and technical fee payments are directed towards MTN International, a company based in Mauritius. The Mauritius company has no staff and is little more than a post box. The remaining 45% was routed to MTN Dubai, where the company employs 115 staff who provide shared services to the group.

MTN told reporters that MTN International remunerates companies in South Africa for management services performed on behalf of the company. They were unable to answer why the payments were made to Mauritius first.

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