MTN Probed for Underdeclaring Sales, Tax Evasion in Uganda

By Nicholas Bariyo

MTN Group (MTN.JO) faces fresh obstacles in its bid to renew its operating license in Uganda, as the government in Kampala begins investigating allegations that the local unit of the South African telecoms giant has been underdeclaring sales and evading taxes.

The investigation was launched after authorities that had been monitoring MTN Uganda found indications of possible tax evasion, according to government spokesman Ofwono Opondo.

"They have been falsifying sales declarations, which we consider economic sabotage," Mr. Opondo said, adding that MTN Uganda's tax compliance was "found wanting."

MTN Uganda denied the accusations on Wednesday, and said that it has yet to be formally notified of the allegations against it.

"MTN Uganda is a law-abiding corporate citizen that has zero-tolerance toward tax evasion and or under-declaration of revenue," said Justina Ntabgoba, the company's spokeswoman. "We are taking steps to better understand the concerns raised in order to assuage them."

Ugandan authorities have already deported several of the company's executives--including MTN Uganda CEO Wim Vanhelleputte--over the past weeks. Mr. Opondo said the deportations were necessary to ensure that the executives don't interfere with the investigation.

The probe in Uganda comes after similar problems for MTN in Nigeria, where the central bank accused the group of illegally repatriating about $8.1 billion in funds.

Economists at research firm NKC African Economics say they believe MTN Group--which also has operations in the Middle East, including in Iran--is falling victim to "aggressive moves [being made] against multinationals on the [African] continent," because "taking on international companies makes leaders look good, at least in the eyes of some local citizens."

One of the conditions of MTN's license renewal in Uganda is that it lists a unit locally.

MTN Group last year listed a unit in Ghana, after being pressured by authorities in Accra seeking more local ownership of foreign enterprises.

The push is part of a broader trend in Africa whereby many governments are looking to get companies to list on local bourses to expand local ownership of businesses on the continent.

Write to Nicholas Bariyo at nicholas.bariyo@wsj.com; @Nicholasbariyo

(END) Dow Jones Newswires

February 20, 2019 12:27 ET (17:27 GMT)

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