By CultureBanx Team
MTN hit with $2B tax bill from Nigerian government
Nigeria brings in a third of MTN’s annual core profit
Nigeria is once again taking aim at Africa's largest mobile phone company MTN, this time hitting the company with at $2 billion tax bill. The latest skirmish with authorities highlights just how bad things are getting for the telecom giant on the continent.
Why This Matters: Nigeria’s Attorney General said the high tax bill was due to "the importation of foreign equipment and payments to foreign suppliers over the last 10 years." With about 54 million customers, MTN is Nigeria’s biggest wireless carrier and its most lucrative market. The country’s business brings in a third of MTN’s annual core profit. Nigeria’s AG asked the South African company to carry out a self assessment in response, but rejected the company’s findings, according to Bloomberg.
MTN has stated it already settled the tax bill with a $700m payment. When the news broke shares of the company on the Johannesburg stock exchange fell sharply, touching 10 years lows. The company will need to convince investors it can successfully defend its position and not have to pay out any more money.
Nigeria’s financial struggles have been well documented, the country’s economy has weakened and volatile prices of crude oil have weighed on its ability to recover. Clashes like what happened with MTN haven’t gone unnoticed by other major companies. Reuters reported South African hotels and casino group Sun International said it was in the final stages of exiting Nigeria, following issues with regulators and shareholders.
Situational Awareness: Things just keep getting worse for the telecom giant. In 2016, MTN agreed to pay Nigeria $1.7bn over failing to disconnect unregistered Sim cards. In addition to the fine, two weeks ago Nigeria's Central Bank ordered the company’s Lagos-based unit to pay back $8 billion, claiming MTN took the funds out of the country illegally.
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