MTN’s appeal against imposed tax liability fails at the High Court
In its judgment, the court presided over by Justice Afi Agbanu held that the Commissioner General did not err nor acted arbitrarily in imposing the tax liability on MTN for imported services between January 2014 to December 2017.
Telecommunication giant, Scancom Ghana which operates under the brand name of MTN has lost an appeal against the imposition of Value Added Tax liability for its imported services by the Commissioner General of the Ghana Revenue Authority.
In its judgment, the court presided over by Justice Afi Agbanu held that the Commissioner General did not err nor acted arbitrarily in imposing the tax liability on MTN for imported services between January 2014 to December 2017.
By a Tax Audit Report dated May 4, 2021, the GRA assessed tax liability against MTN in the sum of GHS 617,072, 509.88 but the latter accepted liability of only Eighteen million, six hundred and fifty thousand, eight hundred and sixty Ghana cedis(GHS 18, 650, 860.00) and duly paid.
There was however a disputed amount which MTN lodged an objection on same and challenged many of the reasons underlying the tax assessment but was not satisfied with the decision by the GRA thus leading to the action at the High Court.
MTN averred among others that the GRA acted arbitrarily by imposing Value Added Tax Liability on its Imported Services for the period when the Value Added Tax Act, 2013(ACT 870) did not impose the same.
It also argued that it had used the Imported Services for that period solely for its Telecommunication business.
Additionally, MTN avered that the GRA erred in law by relying on its Internal Practice Note/Guidelines to impose the National Health Insurance Levy and Ghana Education Tax Fund Levy on its imported services provided by non-resident entities.
However the court, in its judgment further established that the GRA did not rely on any internal Practice Notes/Guidelines to impose the sales taxes on MTN Ghana for imported services utilized for taxable supplies but rather on the relevant statute.
As such, the court held that the GRA did not err in law when it imposed the National Health Insurance Levy and the Ghana Education Trust Fund Levy(together with interest and penalty) on MTN’s imported services between August 2018 to December 2018 irrespective of they being applied to Taxable or Exempt services.
Additionally, the court found that GRA did not rely on internal Practice Notes or Administrative Guidelines to impose the National Health Insurance Levy and Ghana Education Trust Fund Levy on MTN.
The court also held on the second ground of appeal that for the relevant periods in 2018, the Value Added Tax rate of 12.5% was inapplicable on MTN but the Ghana Education Trust Fund Levy and the National Health Insurance Levy of 2.5% each were applicable on its imported services thus held that GRA did not err by imposing same.
