Tax havens exposed

Ordinarily, disputes between Sars and taxpayers are argued in private in tax courts. In this case, MTN and Sars were fighting a battle over the company’s transfer pricing, but in an interlocutory offshoot, a technical issue was referred to open court and the judgment was made public.

In his verdict, Judge J Tlhapi said that, though it was not necessary for the details of the core tax dispute to be discussed, he would mention a few examples.

“These included issues around the management and royalty fees situation in MTN Nigeria; the failure to submit the management/royalty agreements in respect of Investcom [renamed MTN Dubai]; [and] questions on the arrangement or relationship regarding management/royalty fees between [MTN Mauritius], MTN Nigeria and MTN Dubai.”

Asked to explain t his, MTN told amaBungane and Finance Uncovered: “We are not aware of any investigations by Sars connected to or flowing from the high court judgment mentioned above.” Sars declined to answer questions, citing South African tax secrecy laws.

Yet it was clear from the judgment

Photo: Afolabi Sotunde/Reuters Pay as you go: A recent South African court case revealed that the revenue service has raised red flags over MTN Nigeria’s management fee payments.