MTN Group said the over $700 million tax bill it received from the Ghanaian government has been scrapped.
Ghana’s decision came after “extensive and productive discussions” during a 21-day negotiation period between the West African nation’s authorities and the mobile phone operator, MTN said in a filing at the weekend.
The decision to withdraw the tax bill came after the Ghana Revenue Authority last month sent the country’s largest corporate taxpayer a surprise claim for the period between 2014 and 2018.
The potential fine represented about 5% of MTN’s market capitalisation and the government’s decision “removes a threat to this year’s shareholder returns”, Bloomberg Intelligence analyst John Davies said in a note.
Ghana’s cash-strapped government has been demanding some of the nation’s largest companies to pay millions of dollars of back taxes. Gold Fields, Kosmos Energy and Tullow Oil have received similar bills. All of the companies dispute the government’s claims.
Ghana lost access to international capital markets because of its ballooning debt and loan-service costs. The government has been forced to allocate most of its revenue to service an estimated R810-billion of public debt.
It is restructuring most of its obligations amid a slump in the cedi and is seeking a US$3-billion loan from the IMF.