Like a knight in tarnished armour, Franklin Cudjoe comes charging in where even neophytes fear to tread. In his current attempt to simulate a crusade, he is so misguided and ill-informed that he would have us as a nation place our faith in the better nature of telecos. I think not.
In his contributions to the debate on the nation’s Common Monitoring Platform, Mr. Cudjoe suggests that we might place our faith in the telecos to provide us with the information we require from their own operations. His faith is touching but poorly grounded. The foundations of his faith do not stand up to even peremptory scrutiny.
I did some of the kind of research one would have expected of our latter-day crusader before making so bold an assertion as he does and the results do not make for pretty reading.
The foundational thinking behind the Common Monitoring Platform is that we need to obtain as comprehensive as possible a view of the totality of the operations and activities of the telecom operators. As a continent, Africa has long been subject to a regime of aggressive tax avoidance through unfair competition practices and under declaration at the hands of the telecom operators.
There is compelling empirical evidence to support the assertion that across the continent, the modus operandi of the telecom operators is a cocktail of under-declaration, tax evasion and non-compliance with the law. Given that predicate, how and why would Mr. Cudjoe suggest that we might look to the telcos to provide us with the information necessary to ensure we are able to accurately compute their liabilities?
In Uganda, President Museveni declared in his 2017/2018 budget speech that the telcos had cost the country over US$400m in lost tax revenue in the previous year. He offered that as the reason government was acquiring equipment to trace all telephone calls. Prior to this, what the Ugandan authorities had been doing was levying fees and taxes based on what the telecom companies said they had earned.
In Nigeria, on December 14 2016, an ad hoc committee of the National Assembly set up to investigate allegations of malpractices and fraud within the telecom industry declared that Nigerian law guiding contracts between telcos and the Nigerian music and creative industries and content makers had been grossly violated (allegedly to the tune of nearly US$500m).
In Zambia, in August 2017, the Zambian Revenue Authority declared that it had finally been paid the equivalent of US$10m by MTN in unpaid taxes for non-compliance with VAT returns.
In Rwanda, in May 2017, the Rwanda Utilities Regulatory Authority fined MTN US$8.5m for breach of its license obligation requiring it to comply with all applicable laws and regulations issued by the competent authority.
In Nigeria, in 2016, MTN reached a settlement with the Nigerian government to pay a fine of US$1.67bn for failure to register 5.1m SIM cards as required by Nigerian law.
In Liberia, in 2016, the Liberian Supreme Court ruled that the MTN affiliate, Lonestar Communication Corporation had wrongly claimed deductions on unpaid expatriates’ salaries taxes from the government and fined it US$2.4m.
In Cameroon, in 2016, MTN and Orange were fined over US$160m for not paying taxes on their money transfer system known as Mobile Money.
As a result of a 2-year investigation in 2015 called “Finance Uncovered”, MTN subsidiaries in Cote d’Ivoire, Ghana, Nigeria and Uganda were alleged to have made payments over many years of hundreds of millions of dollars in “management fees” to a sister company in Mauritius that was essentially no more than a post office box. Those payments decreased the revenue of the companies and effectively reduced the income tax paid to the countries in which they operate.
Here in Ghana, earlier this year, Vodafone elected to discontinue a suit challenging a tax assessment of GHc160m by the Ghana Revenue Authority for corporate income taxes in Ghana for the past six years. The discontinuance was pursuant to “fruitful discussions between them and GRA”.
In Tanzania, in 2017, the Tanzania Communications Regulatory Authority slammed mobile operators with hefty fines for registering new SIM cards without using the bearers ID, as required by law. The firms were penalized with additional fines because this was not the first time and also a further additional fine for endangering public security.
We list these acts of malfeasance to demonstrate that telcos harbour in their DNA a disposition to dissemble. Such a conclusion appears neither unreasonable nor unwarranted. That being the case, it beggars’ belief that anyone would seriously advocate that the Ministry of Communications repose faith in the better nature of telcos as the way to gather data for the purposes of levying tax assessments.
By Dr. Ishmael Hanson (PhD)
