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.
Company documents published by MTN said that money in MTN Mauritius was used to repay external debts of the MTN group and dividends, rather than pay for management services.
But after further questions were put to MTN, the company was forced to admit that not all of the revenue was passed onto South Africa. The company refused to disclose how much it kept in Mauritius.
The company said that MTN I is resident in South Africa for tax purposes and the Mauritian entity gives no tax benefit to the company.
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