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

MTN Nigeria office
MTN Nigeria office
Michael Ikpoki, CEO MTN Nigeria
Michael Ikpoki, CEO MTN Nigeria

MTN has consistently prided itself as the foremost telephone company that is getting Nigerians talking the most. Now the South African company is about to set tongues wagging across networks with revelations that it has routinely been shipping billions of naira overseas to avoid paying its fair share of tax in Nigeria.

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.

For any economy, it is a slow death.

The red flag was raised the moment our investigations showed 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.

On the basis of an earlier management fees agreement that was technically quashed by NOTAP and on the basis of MTN’s reported revenues, 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.

Transfer Pricing

For corporate organizations determined to escape the taxman but still cleverly staying on the right side of the law, Transfer Pricing is the new cellar door constructed by the most ingenious of accountants. It is a new global disease to which Third World economies are the most vulnerable.

Multinationals employ Transfer Pricing to move their profits offshore, leaving behind a shrinking tax base in their host countries and inexorable cuts to public services.

In Africa, tax avoidance has been named as one of the factors holding the continent back by starving governments of the revenues it needs for development.

A report jointly commissioned by the United Nations and the African Union and drafted by a high level panel led by former South African president Thabo Mbeki considered tax avoidance by multinationals to be an “illicit financial flow” and a significant drain on government resources across the continent.

In total illicit financial flows, which included corruption and the proceeds of crime, were determined to be costing the continent $50billion a year.

Just last year, South Africa’s deputy president Cyril Ramaphosa had harsh words for tax dodgers. He said: “Tax evasion is not only a crime against the state; it’s also a crime against the people of our country, ordinary people.”

Curiously, the same Cyril Rhamaposa was non-executive chairman of the board of MTN between 2001 and 2013 before he became South Africa’s No.2 man. In effect, the same tax practices which the deputy president strongly condemned in his country as financial crime is vigorously being promoted in Nigeria.

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.

Until now, tax justice investigations had focused on computer giants, corporations in the extractive industry, food and beverages; in fact everywhere but the mobile phone sector despite the cell phone industry in Africa being one of the largest and most important industries for the continent.

Mobile phone has been a cheap and quick way of rolling out the vital communications infrastructure that has underpinned Africa’s growth story over the last decade. As a result the industry has seen explosive growth. With 685million mobile phone users in Africa, the success story means that cell phone companies are now the largest contributor to government revenues in many African countries. That is when they pay their fair share of taxes.

Artificial operating costs

To pay little or no tax, companies determined to cheat begin by seeking ways to create artificial operating costs in the country where they operate. 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.

Because of the growing concerns that multinationals are using intra-company trading to shift profits around the world by overcharging for services delivered or in more extreme cases by creating artificial transactions where no services was rendered at all, respective countries have a maximum percentage of profits it can allow companies to pay out as management fees.

For example, in Senegal, accounts from the company Sonatel show that the company has a ‘cooperation agreement’ with parent company France Telecom that is capped at 1.43% of revenue.

Until 2010 MTN Nigeria had an agreement with MTN Dubai to pay 1.75% of revenues to the company for management, and royalties for the use of the MTN trademark. Nigeria requires that management fees paid by multinationals are approved by the National Office for Technology Acquisition and Promotion (NOTAP). The fee payments had been reversed following a failure to come to a new agreement on management fees with Nigerian regulators.

MTN’s previous agreement with NOTAP expired in 2010.

Notwithstanding, MTN has continued to make payments overseas. When we sent questions to MTN over these unauthorized payments, the company told us that this was because they expected NOTAP to approve a new deal and backdate it to the date of the expiry of the previous deal.

MTN’s financial activities are now being questioned by more than one tax authorizes in Africa.

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. This was 9.64% of the company’s revenue. Normally the maximum fee level allowed in Ghana is 6%.

We can reveal that the high levels of fees attracted the attention of Ghana’s intelligence services, which launched an investigation into “economic fraud” between 2012 and 2013.

MTN’s management fees need approval from the Ghana Investment Promotion Centre (GIPC). The Ghanaian “National Security Taskforce” has called for a “review of all technology transfer and management service agreements currently held by GIPC to remove sections which are inapplicable and wrongly provided for” and upgrading and training of state systems and staff.

In response to this, MTN in Ghana told us: “The technical and management services agreements between Scancom and Investcom were duly approved by the GIPC.”

The current head of the GIPC is Mrs. Mawuena Trebarh, who between 2007 and 2012 was responsible for government relations at MTN Ghana. This reporting team asked Mrs Trebarh to comment on whether her previous role could be perceived a conflict of interest. She did not respond to our requests.

In response to our enquiries MTN confirmed that the company paid 12 billion West African Francs in 2012 and 14 billion West African Francs in 2013 in management fees to MTN International. The figure for 2013 is equivalent to 5% of the revenue made by MTN in Cote d’Ivoire.

Dubai paradox

Dubai is one of the places MTN ships huge profits to. Meanwhile, MTN does not operate any mobile phones in Dubai, yet it has significant operations in the small city state.

MTN told us that it employs around 115 people in Dubai who provides services to the MTN group such as group procurement, group finance, legal services, human resources and other corporate functions.

One tool that campaigners have said will be helpful is to look at company reporting on a country by country basis. If a company is making huge revenues in a country where it has few employees but there is a low tax rate, which would suggest that there may be some profit shifting taking place.

In Uganda, a dispute between the Uganda Revenue Authority and MTN has revealed that the company is paying 3% of its turnover in management fees to MTN International.

The fees have been challenged by the Uganda Revenue Authority (URA) who issued MTN with a “notice of assessment” in 2011. This was for a number of tax issues between 2003 and 2009, but a large portion was to do with a dispute over management fees, most of which had been paid to Mauritius.

Correspondence between the URA and MTN seen by us show that the URA questioned the legitimacy of these fees, and pointed out that MTNI, the company providing “management services” to MTN Uganda had not spent any money in the years they had looked into. The URA said this could only mean two things: that management services provided to MTN Uganda had either already been paid for by MTN Uganda (and so MTN was in effect charging twice for the same thing) or they were never provided at all.

The Ugandan authority told the company: “We have repeatedly asked for evidence of specific work performed by MTN Group for MTN Uganda for each of the tax years 2003 to 2009. We have only been provided with very little information relating to 2009 and the latter years. This information is very far from justifying a payment of 3 per cent of MTN Uganda’s turnover as management fees.”

NOTAP keeps mum

Asked to confirm the amount of fees paid out to MTN Dubai and Mauritius based on the company’s reported revenue between 2002 and today, MTN told PREMIUM TIMES: “There is no disclosure obligation for this information in South Africa or Nigeria.”

Asked to explain the possible justification for MTN Nigeria to pay fees for management and technical services to a company with no employees, MTN said: “It is the contracting party’s prerogative as to how it elects to discharge its contractual obligations.”

Meaning is that MTN Mauritius can perform its task without a single staff member.

PREMIUM TIMES made sustained efforts to get NOTAP and the Federal Inland Revenue Service (FIRS) to comment on the MTN practices in Nigeria.

The Director in charge of Technology Transfer and Agreement, Ephraim Okejiri, initially pleaded that he was in a meeting, and that the reporter should wait.

But after over four hours of waiting, he sent a secretary to say he would not be able to give any information on MTN.

Similarly at Nigeria’s tax agency, the Federal Inland Revenue Service, the Director of Public Communications, Emmanuel Obeta, who had earlier promised on three occasion to make information available on the matter suddenly had a change of mind.

He said relevant officials who should provide him with the information sought were all not available.

Additional report ‎by Bassey Udo and Nicholas Ibekwe.


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  • Bolaji

    Same thing Tolaram Group is doing to Nigeria, pls investigate Tolaram group Head office at Eric-Moore, sister companies include BHN Logistics, Multipro, Hypo, MBH Power, Panabiz, Dufiland co

    • wode

      And also, all the FIR officials too should be probed for their possible complicity and failure to get their work done properly. These are some of the ways most of the FIR staff get themselves enriched corruptly .

    • eddy

      Pls write to FIRS…. u will be doing ur country a great service.

      • McAlfred Uta

        And why can’t PT do it if FIRS officials decide to keep mute. Secondly, doesn’t the PR department of FIRS read or buy newspapers?

  • CovertNigerian

    Tax avoidance is not the same as tax evasion. Avoiding taxes may be unethical but it is not illegal and so using words like “smuggles” and “evade” in the title may be inaccurate in this case.
    As far as I can tell, this investigation has not proven that Nigerian tax laws have been broken. MTN may be taking advantage of regulatory loopholes and that is a completely different issue. As such, I am personally disappointed in the quality of the headline – it doesn’t reflect the kind of journalistic rigour and objectivity that professionals should be working toward.

    • Basketmouth

      Avoiding tax by cooking the books and lying to shareholders is not only illegal but criminal. There is no way a company can avoid paying tax without lying and cooking its account book. Forensic audit of these companies will unearth the greatest financial worms that has hitherto deprived so many African countries the much needed revenue to improve the lot of the people. It is unconscionable to benefit from a people and turn around to fleece them by technical crookedness. While there is nothing like moral consideration in business, it is true that successful business practice is a two way traffic hence these companies should be made to pay for their sins for calling the people on the back of whom they build their success fools.

      • CovertNigerian

        I have to disagree. Tax avoidance is a big global issue affecting global economies from the most to the least developed. It is NOT illegal. These companies spend millions of dollars on lawyers who help them find loopholes in regulations that they can use to minimize their tax burden. Just lookup how much tax amazon paid in the UK for instance – they broke no laws but everyone (including me) can agree that they have acted unethically.
        Again I emphasize – there is a difference between tax avoidance and tax evasion. If however there is evidence that laws have been flouted, I hope regulators will fall on defaulters like a tonne of bricks and make them pay back taxes and heavy fines.

        • Rumournaire

          You are spot on. The headline is misleading. The article has not demonstrated that MTN broke any Nigerian law. It is up to the Nigerian government to put fiscal regulations in place to limit how much of a multinational’s turnover can be remitted to its parent company or associates. If NOTAP is not interested in this issue, it is either it knows there are no regulations to stand on, or that its officials have been bought by MTN. This is not unusual. In the Nigerian oil industry, when told that Shell was doing something that would hold Nigeria to ransom, a GMD of NNPC once said he did not believe Shell could do wrong!

        • Basketmouth

          Tax avoidance and tax evasion. It is this legal semantics that make people consider law as an ass. While I agree that people exploits loophole to minimize their tax burden, example is Donald Trump, I still think what many of these multi national corporations does is maintaining two sets of books to cover their illegal act.

    • Omoba1

      Oga keep quiet this is tax evasion. When you move funds from subsidiaries to incorporated companies/subsidiaries whose office looks like a post office with no records to show that such office offered services to you – what do you call that.

      Transfer pricing is a well conceived method for companies to hide assets and pay little or no tax

      • CovertNigerian

        There’s no need for any aggression. Like the article, nothing that you’ve added to this conversation establishes that Nigerian law has been broken. Until you or the investigators can demonstrate that this is not merely the exploitation of a legal loophole, I will maintain my position that this may be a case of tax avoidance and not evasion.
        And FYI, using tax havens to minimize tax exposure is not automatically illegal.

    • Guguru

      The issues of tax avoidance and tax evasion is like asking whether you want red pepper or green pepper in your food. I don’t even think this issue is really about taxes even though it was mentioned. The whole thing looks more like money laundering dressed up as some sort of tax related matter. The details and intent of the transactions is the only way to know what really happened.

  • El.sheriff

    What a country…?

  • Say the truth

    Thank you very much premium times for a good job you are doing for this nation. This is what our journalists should be doing. We are waiting patiently for regulatory agency and FIRS to respond and act accordingly. The presidency should step in now if it’s very serious about fighting corruption. No Nigerian company can try this in South Africa and go free. Let’s show we are serious for once. The change starts there.

    • Remi

      You are damn right. Even the country shipped money to south africa and they seized it what would have happen if it was an individual or company.

  • Concerned9ja

    Another first class investigative journalism by Premium Times. Only thr deep can indeed call to the deep. I doff my hat once more. Now, our oil thieves would realise that PT is only fulfilling its mandate to Nigerians, mo matter who and what ate involved- whether Ijaws who believe it is their inalienable rights to steal Nigeria blind because oil is found in their backyard or the so-called S/Easterners who believe morals are for dogs or those who come to equity all the time with unlean hands and always shouting political witchhunt.

    • McAlfred Uta

      Can you for once leave out ethnic matters on this issue and face the national challenge that has been thrown open to Nigerians by PT. It is ethnic commentators/warriors like you that allow all manner of Foreigners – Lebanese, South Africans, Indians, Chinese and even neighbouring Chadians and Nigerien, to ride roughshod over Nigerians. Since this story is not about Igbo, Hausa, Yoruba or Ijaw, why don’t you face the issue at stake?

  • Nwa _ Africa


    Nigeria’s Communications Commission, the country’s telecommunications regulator, has issued mobile phone firm MTN Nigeria, with a $5bn (£3.5bn) fine for failing to disconnect millions subscribers with unregistered Sim cards bought before January 2012.

    From that date anyone buying a Sim card in Nigeria has had to register it under their name by law.

    Phone companies were told to register their existing customers’ Sim cards, which MTN Nigeria – the biggest telecommunications firm in Nigeria – has failed to do.

    The fine is the largest in the history of telecom infringements in Nigeria and may redefine the relationships between telecommunications operators and the regulator.

    Nigerians continue to complain about poor services from mobile network operators and blame the regulators for not doing enough to solve the problem.

    A senior executive at MTN Nigeria tells me that the company will issue a statement on the fine later today.

    • Rumournaire

      This has nothing to do with the subject of the article. Please do not derail the discussion.

  • Guguru

    Premium Times, thanks for this excellent journalism. i don’t know of any newspaper that would have gone as far in Nigeria. I am so proud of you guys. You make me so happy. However, i would caution that transfer pricing is not illegal. Every element of the transaction, through financial forensics, needs to be engaged in this process to probe the exact intent of MTN in order to press charges, if any. In fact, it we look closely, this acclaimed “transfer pricing” may even end up being a form of a complex web of money laundering, based on Nigeria’s business and economic laws. These companies exist as a result of political patronage, and I doubt the political patrons in Nigeria are prepared to see the actions of MTN as criminal when they political elite hardly care about the ordinary Nigerian trying to make a daily living. My view is that this was all part of the extortion racket that has since come to define the Nigerian business landscape in favor of multi-national firms with deep pockets and political connections to the political class in Nigeria. This may be a bigger problem beyond MTN when other Nigerian multi-national firms are closely scrutinized as well. MTN may not be the only firm engaged in this practice. This issue is an area the Buhari administration, using its Nigerian Financial Intelligence Unit (NFIU), can track and monitor companies engaged in these sorts of practice.

    • Omoba1

      Accounting wise it is not illegal, taxasion wise, transfer pricing is illegal because asset can be moved from one subsidiary to another or from parent to subsidiary

      • Guguru

        What are you talking about? Is taxation no longer a sub-set of accounting? It is the intent of the movement that matters and not whether this is about accounting and taxation. Your logic is problematic here because if the transfer pricing was legal as an accounting practice, would it not have tax effect on the party transferring the assets? So, it is the intent of the transfer that makes it criminal.

  • Sanmi Falae

    This is a serious indictment on Mr Thabo Mbeki and the grandiose High Level Panel on Illicit Financial Flows from Africa, of which he is the chairman. The incompetence of African leaders is breathtakingly cultural. Mbeki sits as leader of an institution that is designated for combating the same financial crime of which an organisation (MTN) owned by his own country, is a serial perpetrator. He should resign his seat for young people who know what they are talking about and doing; or that can walk the talk. Nigeria should pursue MTN across seven seas to ensure they pay the tax – and since payment is retroactive, with interest.

    • Remi

      Please this is our responsibility and not that of Mbeki. Stop the typical Nigerian mentality of not accepting responsibility. Is it Mbeki’s fault that we allow ourselves to be ripped off?

  • Maria

    Even South African Zulus now the ones raping us …shame!

  • Very Proud Oily IZON Redeemer

    Miles away from the usual according to Buhari, Rivers state, Delta and Akwa Ibom should be handed over to Tinubu—kind of stories–that we are often fed with by PT————The trouble with these types of stories is that the man put at the helm of affairs to investigate such news items in EFCC-Alhaji Fulani Lamordi himself is a thief—a hardcore Fulani rogue-who is pretending to be working for Buhari while stealing from the money and properties recovered from thieves–The other Fulani man at ICPC is even worst that Lamordi—Now we have another rogue in INEC-who is accused of stealing over one billion from government–Yet was offered a job by Buhari the so called Mr Integrity–while the Buharimice in PT keep quiet for fear of being exposed—themselves for being on the salary list of the Apes in APC—What did Ribadu do about tax invasion in the oil sector–Nothing instead—-Nigeria is chasing the woman–Mrs Madueke- who hired Ribadu to investigate NNPC—-separation is the answer–tax haven or no tax haven————-at the end of the day what happened to the Siemens and Halliburton thieves—-? Nothing————–because no Ijaw man was involved the case-it-met a dead end–animals

    • Remi

      Don’t you ever have any positive thing to say about any issue. This is a problem facing us as Nigerians but what do you contribute? Nonsense about Tinubu, Fulani, lamorde and such trash. Please wake up, this is a national emergency.

    • Omotolaaraujo

      You will never stop looking like a nut, Redummy.

  • Rommel

    If MTN Nigeria refuses to pay that little fine of $5 billion,I am available to use my expertise to retrieve that mucha from them,they should hurry and pay that money

    • McAlfred Uta

      That is if the NCC does not back track after collecting bribe to say that they were mistaken about the amount of penalty imposed or even make it out that they were mis-quoted and never imposed any penalty. It could be garnished with some idiotic expression that MTN has been a good corporate citizen and never defaulted on any of its obligations to the Nigerian regulator.

  • Du Covenant

    I do not blame MTN a bit, if you hear the hate directed at each other in Nigeria (Igbo, Yoruba, Hausa, Ijaws and the lot) why should the South Africans sit and watch?. They read our dailies, they are operating within Nigeria, they know, hear and see how we spit venom at each other on a daily basis. In the advent of Internet one does not need to step foot in Nigeria to understand this madness, the oil companies are doing it why should MTN and others just watch?. We are the ones encouraging these organisations engage in such activities. If we present ourselves to the world as matured people, the world will treat us differently, how I wish I could choose where to be born.

  • Ato

    i must commend the Emmanuel Mayah for this insightful write-up. The depth of
    research is quite remarkable in an environment were junk journalism is the
    order of the day.

    The activity of MTN is quite disheartening
    and must be roundly condemned, Govt needs to wake up to his responsibility and strengthen
    control. The attitude of the two officials named in the article is
    disgraceful!!!! They should and do no beter…….

  • McAlfred Uta

    Why is NOTAP and FRSC afraid of opening up on MTN Nigeria transfer pricing to Mauritius and Dubai?. I appeal strongly to PMB and his APC led Federal Government that there is more fraud here than the issues we have been reading in the newspapers lately. For good measure MTN Nigeria has just been fined over $5 billion by NCC and I wouldn’t want to read that this matter has been resolved amicably without MTN paying the fine. I sincerely appeal that both EFCC and ICPC be unleashed on this “ever” fraudulent continental giant that earns more money in Nigeria than its country of origin – South Africa. I am also appealing to Premium Times to investigate DSTV for similar crimes. The best way to deal with these tax evaders is to reject their services and this much I did to MTN Nigeria when South Africa returned Nigerians on one flimsy excuse of having fake yellow fever cards. Lets patronize GLO, Multilinks, and all indigenous companies, and this is the only way they can grow and compete with the likes of MTN. Let EFCC and ICPC also investigate NOTAP and FIRS officials for criminal collaboration with MTN.

    • MOSCO

      Am sure many of you do not understand how the economy works. The telecoms industry contributes 8 % to the Nigeria GDP, and MTN has about 50% of the market share. Thus MTN Nigeria is about 4 % of the GDP of Nigeria. It may interest you to know that most of the banking industry activities like the online banking and other payment modes and allied financial services run on the telecoms platform. Please crash MTN Nigeria and you would have succeeded in crashing the economy of Nigeria. You may wish to know that the country is currently struggling with issues arising from global slump in oil prices. Wisdom dictates that we approach this issue with utmost professionalism and NOT the crass sentiments and tribal bigotry being exhibited by most people here. You may as well consider the chain effects on the banking industry, suppliers, technology market, labour market, government revenue, import duties on imported technical equipments, etc. Nigeria needs MTN and not the venoms being spewed online here. Finally, is tax avoidance scheme like transfer pricing ( TP) illegal ? I’m a learned tax fellow and are aware that Nigeria has a TP regulation in place. So why all the shouts even before you do the smallest of investigations ? Let us thread cautiously. Nigeria shall be great !

      • Raymond Abikale

        As long as I agree to your points, u goofed when u said Nigeria needs MTN. Are u indirectly saying without MTN, there won’t be Nigeria, please wake up, MTN needs Nigeria is the right word! Our being gullible is the main reason why MTN even has the highest base subscriber in Nigeria compared to other Nations they’re. MTN has sucked Nigeria enough, MTN can’t afford to lose Nigeria because of the enormous gain. The only effect of MTN departure is unemployment and government of course will draft plans to mitigate that. MTN can’t be feeding from us and yet don’t want the owner of the food to eat, that’s sheer wickedness. MTN needs Nigeria as Nigeria was doing well even before the arrival of MTN!

      • Sunny Omoragbon

        Good points. Notwithstanding your expressed reservations, I strongly advocate that regardless of the percentage being contributed by MTN or any company for that matter to our GDP, such companies must be investigated and compelled to obey our laws, where they have been found to have infracted same.

  • nijaombudsman

    If you watch, ‘How to rob Africa’ you will be able to better understand how some of these companies and politicians loot money with the aid of dubious companies in these so called ‘tax havens’. The fact that MTN and other foreign owned companies are devising ways to shortchange our nation only further highlights the failure of our nation’s monitoring bodies and financial institutions. The type of money being mentioned here is not one that can go through the banks without notice. Many of our own people sadly connive with these companies to rape their their own nation.

    The onus is on the government and the oversight institutions to look into this matter to ascertain the extent of this fraud. If indeed it is the case, MTN deserves a huge fine just as all institutions and individuals who facilitated the illegality