Court rules in favour of GRA in MTN tax liability case

The case pertained to the period from January 2014 to December 2017, during which GRA imposed tax liability on MTN Ghana.

Scancom had contested the imposition, alleging errors and arbitrary actions by the GRA. The court, however, sided with the GRA, deeming the imposition lawful and not arbitrary. Despite MTN Ghana's efforts to reverse the tax liability order, the court upheld the GRA's decision.

The judgment referred to provisions of the Value Added Tax Act, 2013 (Act 870), highlighting that Value Added Tax would not apply only if imported services were used in making taxable supplies, such as in telecommunication business. However, Value Added Tax would apply if the services were used in making exempt supplies, like in mobile money business.

The court emphasized that the GRA correctly applied the definition in section 65 of the Value Added Tax Act to determine the total cost of imported services and apportioned them between exempt and taxable supplies based on their contribution to total revenue. Consequently, the imposition of Value Added Tax liability on MTN Ghana for the specified period was deemed justified due to its status as a partial exempt trader.

Regarding the second ground of appeal, the court clarified that the National Health Insurance (Amendment) Act, 2018 (Act 971) and the Ghana Education Trust Fund Act, 2018 (Act 972) were separate from the Value Added Tax Act 2018 (Act 870). These laws imposed a tax on the import of services not subject to input tax deduction, irrespective of the purpose of the imported services during the relevant period in 2018.

In conclusion, the court ruled that the GRA did not err in imposing the National Health Insurance Levy and Ghana Education Trust Fund Levy, along with interest and penalties, on MTN Ghana for imported services from August 2018 to December 2018, regardless of their application to taxable or exempt services.

The tax appeal by MTN Ghana was deemed unsuccessful, and no costs were awarded to either party.