Africa’s largest mobile operator MTN Group is rolling out tax technology across all its operating companies to increase compliance.

MTN Group, which has 289 million subscribers and 17 462 employees across 19 markets, says technology will assist it in reaching regulatory conformity, as well as increase transparency.

The pan-African telco recently released its 2022 tax transparency report, saying it has begun an exercise of configuring a tax risk register system for the whole company.

The report shows MTN's total tax contribution in 2022 amounted to $3 billion (R51.5 billion), up from $2.4 billion (R44.4 billion) in 2021.

The tax contribution included corporate, taxes, withholding and payroll taxes, operating license fees and other payments to government authorities.

Commenting on tax technology improvements across the group, Tsholofelo Molefe, MTN Group chief financial officer, says: “Full implementation of the tax provisioning system is ongoing.

“We completed the end-to-end process automation of the tax provisioning system for MTN South Africa’s operating company (opco). We plan to carry out a similar end-to-end process of the tax provisioning system automation across all our opcos.

“We began an exercise of configuring a tax risk register system for the whole group. We also began with a configuration process of a total tax contribution system for the group.”

In the report, MTN bemoans the uncertain tax positions it faces in different markets, saying the telco’s interpretation and application of the various tax rules applied in direct and indirect tax filings may result in disputes between it and local tax authorities.

Molefe comments: “Tax legislation is often subject to interpretation, particularly in the absence of established case law, and as such, creates areas of uncertainty on which management is required to make judgements.”

This comes, as the GSM Association, a global industry body of mobile network operators, recently urged governments to rationalise tax structures, based on internationally accepted principles.

Both MTN Group and Vodacom Group, two on the continent’s biggest mobile companies, have tax squabbles in various markets across Africa.

Earlier this year, MTN Group was at odds with the Ghana Revenue Authority over a $773 million tax claim, the matter was subsequently withdrawn after ‘extensive and productive discussions’, the telco told shareholders.

Similarly, Vodacom, which has presence in seven countries, is readying for a face-off with Congolese tax authorities over an $165 million auditing variation that could plunge the mobile operator’s operations in that country into turmoil.

The need for a harmonised tax regime on the continent is also supported by analysts who say there is a need to spruce up the regulatory environment as some governments are overburdening telcos with special taxes.

In a recent interview with ITWeb, Peter Takaendesa, head of equities at Mergence Investment Managers, said policies in some countries are unpredictable, applied retrospectively and, in some cases, there is enforcement that “appears entirely unfair, such as changing tax calculation methodology long after the assessment period, or changing the interpretation of laws just to plug government revenue holes.”

In the case of MTN Group, Molefe says, in respect of dealings with revenue authorities, the telco values a good working relationship and maintains these relationships, based on key principles.

These principles, she says, are transparent, open and honest communications, based on credibility and integrity, full disclosure of all relevant information, and a high level of responsiveness to revenue authorities’ queries.

“We believe in open communication, and we meet with tax authorities on a regular basis to ensure that our business dealings are better understood by the authorities and to exchange perspectives on various matters in the course of tax audits and follow-up questions,” says Molefe.