31 October 2015

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Tax Evasion MTN ships Billions in Tax Heavens Paying less taxes

Tax Evasion MTN ships Billions in Tax Heavens Paying less taxes

MTN is the largest cell phone company in Africa with 227.5 million subscribers. The company, which operates in more than 20 countries across Africa and the Middle East, has Nigeria as its biggest operation.

An 11-month-long investigation by PREMIUM TIMES reveals that MTN has been running circles around Nigerian revenue authorities using a complex but noxious tax avoidance scheme called Transfer Pricing.

PT reported that MTN Nigeria has been making payments to two overseas companies – MTN Dubai and MTN International in Mauritius – both located in tax havens.

It was discovered that in 2013 for example, MTN set aside N11.398 Billion from MTN Nigeria to pay to MTN Dubai. A similar transfer of N11.789 Billion was made by MTN Ghana to the same MTN Dubai, making it a total of N23.187 Billion that was shipped to the Dubai offshore account.

In a rare disclosure in 2013, MTN admitted it made unauthorized payments of N37.6 Billion to MTN Dubai between 2010 and 2013.

The transfers were then “on-paid” to Mauritius, a shell company with zero number of staff and which physical presence in the capital Port Louis is nothing more than a post office letter box.

The disclosure amounted to a confession given that MTN made the dodgy transfers without seeking approval from the National Office for Technology Acquisition and Promotion (NOTAP), the body mandated to oversight such transfers.

it is estimated that N90.2 Billion could have been transferred out of Nigeria in management fees alone since the company was founded in 2002.

For example, a company is in Nigeria but has a parent or subsidiary company in another country. It makes huge profit but decides to declare a much lower profit-before-tax. To achieve this, it pays the parent and/ or subsidiary company for services not rendered and ships cash to them. Where services are rendered, the costs are inflated. Such services may include royalty for the use of brand name, procurement services, technical services and management services.

Typically, the recipient company is located in an offshore territory under a different financial jurisdiction. MTN has a substantial network of subsidiaries in offshore tax havens, including the British Virgin Islands, Dubai and Mauritius.

PT also reported that In Ghana the MTN subsidiary, Scancom, has been paying vast management fees to companies located offshore. Our investigations reveal that Scancom paid 758m GHS in management and technical fees to MTN Dubai between 2008 and 2013.

Transfer Pricing is the new method of avoiding legal taxes.

Using the Transfer Pricing multinational companies send money to abroad showing less profits or no profits at all and result is that no need to pay tax to the country where they operate.

Suggested Reading –

INVESTIGATION: How MTN ships billions abroad, paying less tax in Nigeria

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Saturday, October 31, 2015

Tags – MTN Nigeria Tax Fraud