The largest telecommunications company's dack days may be over in Nigeria, however, governments must be proactive to avoid leakages for tax returns.
Beaming with new confidence and a sigh of relief as it enters 2019, MTN Group Ltd. shares on rose as much as 8.2 percent, days after Christmas after it settled scores over allegations it illegally transferred $8.1 billion of funds out of Nigeria, ending a crisis that had threatened its operations in the country. MTN-Office MTN announced on Monday that it would pay just $52.6 million to end the dispute in Nigeria, its biggest and most lucrative market, but also its most troublesome.
The case had negatively impacted MTN, Africa’s biggest telecoms company, for four months, dragging its share price down 20 percent to hover around its lowest level since 2009 while also sparking pessimism around the ease of doing business in Nigeria. It centred on allegations that dividends paid by the firm between 2007 and 2015 were based on improperly issued certificates.
The Central Bank of Nigeria (CBN) had initially ordered MTN and its lenders to bring back $8.1 billion it alleged the company had illegally repatriated to South Africa during that time. But after MTN provided additional documents, the CBN concluded only one 2008 private placement, worth around $1 billion, was irregular.
In August 2018, MTN had filed the suit, seeking an injunction to restrain the CBN and Attorney General of the Federation (AGF) from taking further actions to on foreign exchange repatriation and taxes reclaim.
Earlier, Nigeria's central bank (CBN) ordered Africa's telecoms giant and four other banks to “refund a total of $8.134billion moved out of the country" for breaching the country's forex regulations.
The central bank also slammed a huge N5.8 billion fine on the banks for allegedly aiding MTN in the illegal capital repatriation. MTN shares surged 18 percent to 146 rand after the announcement in their biggest jump since April 2000. They have shed 22 percent since the fine was announced.
The concern by many observers in the financial sector is that of evident leakages in the country's financial sector and a weak observatory body to regulate effectively the workings of multinational companies. With over 35 multinational companies in the country, Nigeria loses $15 billion annually from tax evasion and illegal repatriation.
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