The Zimbabwean central bank has suggested eliminating the 2% tax on mobile money and digital transactions, potentially benefiting both operators and customers. This move aims to promote electronic payments in the country.
While this tax, introduced in 2019, has been a significant revenue source for the government, both the Zimbabwe National Chamber of Commerce and the central bank now advocate for its removal. The hope is that this will not only assist operators but also boost financial inclusion and stimulate economic growth.
On the other end of the spectrum, the MTN Group, a prominent pan-African operator, is facing a substantial challenge. It has been directed to pay $72.6 million in back taxes for the period between 2007 and 2017 in its largest market, Nigeria.
This development stems from an ongoing issue that began in 2021 when the Federal Inland Revenue Service (FIRS) imposed a Value Added Tax (VAT) assessment of $93.5 million on MTN Nigeria. This assessment included $72.5 million in principal liability and $21 million in penalties and interest. Despite objections and appeals from MTN Nigeria, the Nigerian Tax Appeal Tribunal ultimately ruled in favor of FIRS, mandating the settlement of the assessed tax liabilities.
The MTN Group is now carefully considering its response to this ruling. The outcome of this situation will undoubtedly impact not only the company’s financial position but also its future operations in Nigeria.
These contrasting stories from Zimbabwe and Nigeria vividly illustrate the complexities and delicate dynamics between mobile operators and tax authorities in Africa. While Zimbabwe proposes removing a heavy tax to encourage digital transactions, Nigeria is persistently pursuing unpaid taxes from a significant telecommunications player. As African economies continue to evolve, finding the right balance between taxation and fostering growth in the mobile sector remains a challenge for both governments and operators.