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for the year ended 31 December 2018

MTN Group LimitedTax report for the year ended 31 December 2018

Contents

MTN is an emerging market mobile operator with a clear vision to lead the delivery of a bold, new digital world to our 233 million customers across 21 operations. We are inspired by our belief that everyone deserves the benefits of a modern connected life.

Ours is one of the most admired brands in Africa and is also among the most valuable African brands. MTN is one of the largest companies listed on the JSE in Johannesburg, and had a market capitalisation of R168 billion at the end of 2018. We were established in South Africa at the dawn of democracy in 1994 as a leader in transformation. Since then, we have grown by investing in sophisticated communications infrastructure and by harnessing the talent of our diverse team of people across Africa and the Middle East.

All about MTN tax report

04 Foreword

05 Economic contribution

06 Current tax environment

07 MTN’s approach to tax

09 Continuous improvement on tax governance and transparency

10 Total tax contribution and effective tax rates

MTN Group Limited Tax report 201802

1 Adjusted group profit before tax represents group profit before tax as reported excluding: Non-taxable gain from Cyprus sale (2018: -R2,11 billion and 2017: Rnil); Nigeria regulatory fine (consisting of the remeasurement impact of when the settlement was entered into in 2016 and the finance costs recognised as a result of the unwinding of the initial discounting of the liability) (2018: R1,16 billion and 2017: R1,06 billion); MTN Zakhele Futhi IFRS 2 charge (2018: Rnil and 2017: R0,4 billion); hyperinflation and the relating goodwill impairment adjustment (2018: -R0,55 billion and 2017: R5,2 billion); Tower profits from IHS rights exchange (2018: Rnil and 2017: -R6,04 billion) and IHS loan derecognition (2018: Rnil and 2017: R2,8 billion).

2 The adjusted group effective tax rate is calculated by dividing the group reported tax number (after adjusting for the tax impacts of the numbers included in footnote 2 above, as applicable) by the adjusted group profit before tax.

3 Taxes on production is made up of all indirect taxes and withholding taxes collected and borne by MTN.4 Taxes on profit is made up of corporate taxes borne by MTN, education tax borne by MTN and dividend taxes borne and collected by MTN.LA Limited assurance. Assurance report and definition available at www.mtn.com

Salient features

Taxes on production3

R11,9bn2017: R13,0bn

Adjusted group profit before tax

R14,2bn1

2017: R13,02bn

Group total tax contribution LA

R24,1bn2017: R27,9bn

Reported group effective tax rate

36,18%2017: 52,46%

Group profit before tax

R15,0bn2017: R9,6bn

Adjusted group effective tax rate

38,13%2

2017: 40,49%

Group revenue

R134,6bn2017: R132,9bn

Taxes on profit4

R5,2bn2017: R9,1bn

MTN Group Limited Tax report 2018 03

Foreword

MTN’s reporting on tax is subject to our system controls and internal financial controls. We maintain this in line with our standard processes and procedures on enterprise risk management and governance. In 2018, we prepared and submitted our country-by-country (CbC) report to the South African Revenue Service (SARS) for the 2017 year. For our 2017 tax report, we were placed second in the PwC Building Public Trust Awards – excellence in tax reporting in the multinational companies category.

To achieve tax transparency, a company needs to move beyond merely providing detail on the tax numbers and performance. In line with this aspiration, in the ‘MTN’s approach to tax’ section we have endeavoured to provide readers with an understanding of the company’s approach to tax-risk management, tax planning as well as views on specific tax risks. Furthermore, in the ‘Continuous improved tax governance and transparency’ section we show that we are committed to continuously improving our tax governance and transparency.

In 2018, MTN continued to contribute significantly to the communities in which we operate through employment, skills development, the development of businesses in our supply chain and our contribution to tax revenues. The latter goes significantly beyond the corporate income taxes paid on our profits. In this report, in the ‘Total tax contribution’ section we endeavour to demonstrate our total tax

contribution, which includes (but is not limited to) corporate taxes, indirect taxes, withholding taxes, payroll taxes, operating licence fees and other payments to government authorities. In the year our total tax contribution amounted to R24,1 billion.

The international tax landscape continued to evolve in 2018, mainly as a result of the Organisation for Economic Co-operation and Development’s (OECD) continuing project on Base Erosion and Profit Shifting (BEPS). We deal with the outcomes of the BEPS initiative and various risks facing the organisation in the ‘Current tax environment’ section of this report.

Integrity is one of MTN’s core values: we are committed to transparency and complete candour is one of our vital behaviours. This voluntary report is testament to our transparent approach; it is an effort to explain our tax affairs more clearly and build and maintain trust with our many stakeholders.

Ralph MupitaGroup chief financial officer


Economic contribution

As one of the largest mobile operators in our markets, we acknowledge that our activities have significant implications for the communities in the regions in which we operate. It is vital that we understand exactly who is affected by our activities so that we can ensure their interests are promoted when strategic business decisions are made. MTN has identified the following among our key stakeholders: governments, regulators, customers, communities, civil society, the media, suppliers and business partners, industry bodies, investors and shareholders, and employees.

Value distributionOur activities drive economic value within each jurisdiction in which we operate. This value is distributed to our stakeholders in a multitude of ways, only some of which are measurable. This includes:

1. BusinessDuring 2018, MTN spent R106,6 billion (2017: R100,1 billion) with suppliers and contractors.

We committed capital expenditure of R26,0 billion (R31,5 billion in 2017), focused on 3G and 4G rollout. MTN South Africa’s share of capex amounted to R9,5 billion (R11,5 billion in 2017); MTN Nigeria’s capex amounted to R6,9 billion (R9,0 billion in 2017); and MTN Irancell’s capex amounted to R3,7 billion (R9,3 billion in 2017).

We plan to spend R28,8 billion on our capex programme in 2019.

2. EmployeesIn 2018, MTN had 18 835 employees representing 64 different nationalities. We spent R9,5 billion in staff costs (R9,2 billion in 2017).

In the year, we invested R270 million in employee training (R252 million in 2017). Employees are actively encouraged to look for opportunities to continuously improve their capabilities and skills through extensive training available digitally, face to face and from other sources supplied by the MTN Academy, or from external accredited and reputable organisations.

For details on MTN people and remuneration please refer to pages 24 to 25 and 66 to 92 of the MTN Group’s 2018 integrated report.

3. Corporate social investment (CSI)As we invest in communications technology and infrastructure in our host markets, so too do we invest in the societies that make up our customer base, now and into

the future. In line with our strategy, MTN’s CSI policy has been to invest in projects and programmes that will lead the way in helping beneficiaries build capacity and self-reliance using digital technology. Our focus has been on four specific areas of critical social needs in our markets, namely education, health, enterprise development and national priority areas. We are now beginning to shift our purpose towards enabling youth empowerment in our markets.

In 2018, MTN’s CSI totalled R185,2 million (2017: R172,2 million), with R86,2 million of the total spent on improving access to education.

In 2018, we spent R35,7 million (2017: R22,2 million) on health programmes.

We spent R25,5 million (2017: R34,2 million) on enterprise development programmes to support the education and upskilling of entrepreneurs to build the sustainability of their businesses.

With regards to national priority projects, our objective has been to support projects and programmes that are of national importance at the time, using our core business strengths in information and communications technology. In 2018 we contributed R17,1 million (2017: R20,3 million) towards national priority projects.

4. GovernmentsIn 2018 we made a significant contribution to government revenues in the regions where we operate. This information is detailed in the ‘Total tax contribution’ section of this report. We are often the largest taxpayer in the markets we operate in.

5. Digital inclusionWith 233 million subscribers across Africa and the Middle East, bridging the digital divide and enabling environmental and economic benefits through the Internet of Things is a priority. Our investment in digital inclusion projects enables us to give back socially to the broader stakeholder communities in which we operate, while also facilitating a commercially viable and sustainable business proposition.

Our digital inclusion investments broadly span the financial, health, education, enterprise and public sector categories, among others. More detail on MTN’s digital inclusion initiatives can be found in the 2018 MTN Group sustainability report in the integrated reports link on our website www.mtn.com.


Current tax environment

MTN has an extensive footprint, with operations and head office companies in 241 countries across Africa and the Middle East. Tax legislation and transfer pricing rules and regulations vary from country to country and consequently we operate in a complex and diverse tax environment.

In recent years, international tax and transfer pricing have become extensive areas of focus for revenue authorities and governments around the world. One of the major developments in this regard is the project on BEPS that was initiated by the OECD in 2013 and finalised in 2015. The BEPS programme comprised 15 action points, aimed at addressing the undesired consequences of differences in tax regimes and lack of transparency. The BEPS programme has changed the international tax and transfer pricing landscape for all companies with an international footprint. The impact on the MTN Group will vary per jurisdiction and will be dependent on whether (and to what extent) the outcome of the BEPS actions are adopted and implemented in the various jurisdictions. The MTN Group adheres to key principles underpinning the BEPS programme, such as ensuring that profits are reported where value is being created, and will continue to apply these principles going forward.

The African Tax Administration Forum (ATAF) aims to provide an environment for African revenue authorities to co-operate, improve the performance of tax administration

and build capable African tax administrations that develop, share and implement best practices. Of the 17 countries in Africa, in which MTN has operations, 13 are ATAF members. Through various initiatives, revenue authorities are increasingly sharing information pertaining to multinational enterprises. South Africa and Nigeria, for example, were among the 31 countries that recently signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of CbC reports. Depending on when and how CbC reporting requirements will be implemented in the various jurisdictions in which MTN operates, such CbC information has been prepared and submitted for 2016 and 2017 years and will continue to be prepared and submitted to SARS. MTN has performed assessments as to the readiness and adequacy of its systems and seeks to ensure that CbC reports can be provided to the SARS.

It has become imperative that multinational enterprises are cognisant of the diversity and complexity of the international tax and transfer pricing landscape and that they are compliant with local tax legislation in jurisdictions in which they operate and with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

1 MTN Cyprus was sold in August 2018. Our information and numbers have considered this and accounted for MTN Cyprus’s contribution from January to August 2018.


MTN’s approach to tax

Tax governanceThe MTN Group board understands and takes accountability for all risks that potentially affect the achievement of its strategic priorities. Derived from an assurance methodology, MTN has implemented robust risk management frameworks consisting of proactively identifying and understanding the factors and events that may impact our strategic priorities, then managing them through effective mitigation plans, internal controls and monitoring and reporting processes.

The way MTN Group manages its tax affairs is directly relevant to its shareholders and other internal and external stakeholders. Taking into account an increasingly complex tax legislation environment, multiple regulatory requirements, and the focus of revenue authorities in protecting their tax revenues through the tightening of rules, increased enforcement and improvement of their approach to tax collection, there is an increased focus on tax risk and controls that will mitigate tax risk to an acceptable level.

To this end, the MTN Group has developed a systematic approach to manage tax obligations and tax risk considering that tax obligations and the associated risks are managed and monitored by many different personnel, business functions, systems and processes within the group.

Principles governing MTN’s approach to taxMTN Group has agreed the following tax guiding principles that support its approach to tax:●● It is paramount to the MTN Group that its tax affairs are

managed in such a manner so as not to cause a detrimental effect on the reputation or brand of the MTN Group. Accordingly, the commitment of the MTN Group is to act responsibly and in an accurate, transparent and timely manner in respect of its tax affairs by fulfilling all compliance, disclosure and reporting obligations, in accordance with the prevailing tax laws in all jurisdictions in which it operates.

●● The MTN Group seeks to create and manage shareholder value by undertaking legitimate and responsible tax planning within the tax laws and regulations of the countries in which MTN Group operates. In this regard, the MTN Group acknowledges that its tax contribution in the jurisdictions in which it operates is significant and manages such obligations in a proactive and forward-looking manner, and in accordance with the prevailing legislation.

●● MTN is committed to transparent and constructive relationships with revenue authorities. These are based on open and honest communication. The need to foster strong relationships with revenue authorities is critical to ensure the management of tax risk.

●● The group commits to ensuring there is the necessary resource capacity and capability to manage its tax affairs in an efficient and effective manner, including investing in tax knowledge and training of tax resources to ensure they have the requisite skills and knowledge.

●● Tax is integrated into all business processes supported by adequate and robust controls, clear lines of communication, defined roles and responsibilities, and financial systems that are adequately configured for specific tax requirements and controls.

Tax risk managementOne of the fundamental pillars of MTN’s approach to tax is a tax risk management framework aimed at ensuring that tax risks are properly identified, prioritised and managed in accordance with MTN Group’s integrated risk management process. The group board and group audit committee provide oversight over the tax risk management framework taking into account the potential financial, legal, business and reputational risks of failing to detect and manage tax risks timeously.

Regular and transparent tax reporting is embedded within the governance structures of the group, including the group audit committee, executive committee and the group board.

Tax risk reporting is achieved through the tax risk management programme. Reporting is done quarterly to in-country and the group board of directors and audit committees.

This process ensures that all tax risks across the countries within which MTN operates are identified, measured, controlled and monitored within the tax risk tolerance levels and managed at the highest governance levels within the group.

Tax risk

ma

na

ge

me

nt re

po

rting

Group board

Group audit committee

Group exco

Group risk and compliance

Group tax

Opco boardOpco audit and risk committeeOpco BRMOpco tax department

For details on our approach to risk refer to pages 33 to 38 of the 2018 MTN Group integrated report. Our tax risk appetite is very low. We believe all taxes justifiably due must be paid.


MTN’s approach to tax continued

Uncertain tax positionsTax 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.

The tax risk management programme, through its governance, provides for robust processes and controls in evaluating the tax provisions and the classification and disclosure thereof, and is an effective enabler in the reporting of these matters. The relevant tax provisions and/or contingencies are discussed and agreed with group tax and the group technical accounting teams, and are communicated to external audit, the group audit committee and the group board.

The group does not recognise liabilities in the statement of financial position until future events indicate that it is probable that an outflow of resources will take place and a reliable estimate can be made, at which time a provision is raised. Contingent liabilities due to uncertain tax exposures in various tax jurisdictions where the group operates amounted to R2 087 million in 2018 (R8 667 million in 2017).

The Nigeria Attorney General (“AGF”) has alleged unpaid taxes on foreign payments and imports and that approximately $2,0 billion in relation to these taxes are to be paid to the Federal Government of Nigeria. MTN Nigeria has denied this claim. In order to protect MTN Nigeria’s assets and shareholder rights within the confines of Nigerian law, we have applied in the Federal High Court of Nigeria for injunctive relief restraining the AGF from taking further action in respect of its order, while we continue to engage with the relevant authorities on this matter. We remain resolute that MTN Nigeria has not committed any offence and will continue to vigorously defend its position.

Relationships with revenue authoritiesIn respect of dealings with revenue authorities, the MTN Group values a good working relationship and maintains these relationships based on the following key principles:●● Transparent, open and honest communication based on

credibility and integrity, thereby building mutual trust.●● Full disclosure of all relevant information.●● A high level of responsiveness to revenue authorities’

queries, by dealing with such in a timely and efficient manner.

●● Commitment to early resolution of tax disputes with revenue authorities.

●● Do not use any influence to seek preferential or extra-statutory treatment in tax rulings or settlements.

●● Seek to boost the capacity of revenue authorities in poorer countries through positive and proactive disclosure and co-operative working practices and to not undermine revenue authorities’ capacity or independence.

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, to exchange perspectives on various matters in the course of tax audits and follow-up questions.

We support the initiatives of the ATAF and closely follow all relevant tax and transfer pricing developments and endeavour to be compliant with all relevant regulations including guidelines by organisations like the OECD.

Tax havensThe OECD set out four factors to be considered for identifying tax havens: (1) no or nominal tax is levied on relevant income; (2) lack of effective exchange of information; (3) lack of transparency; and (4) no substantial activities.

MTN has subsidiaries in jurisdictions that may be defined as tax havens. The reason for their existence in these jurisdictions is always based on sound business principles and not merely to obtain a tax benefit. MTN International (Mauritius) Limited and MTN (Mauritius) Investments Limited, which are registered in Mauritius, are tax resident in South Africa.

Advocacy or lobbying activityMTN seeks to engage openly and proactively with national and international organisations on matters of tax policy and potential changes to tax legislation to ensure regulations promote sustainable investment in the territories in which we operate. This includes information sharing and requesting input on whether subjects for consultation and lobbying are in place or have been monitored in other countries.


Continuous improvement on tax governance and transparency

Tax technology improvement across MTN opcosAs part of our drive to improve MTN tax governance and transparency, in 2016 we embarked on a tax technology review across the whole of MTN and completed this project in 2017. The result was a roadmap stipulating the type of tax systems we can implement or improve to better our tax governance, compliance and transparency objectives.

In following the roadmap, in 2017 we began with the configuration of our tax provisioning system for the whole MTN Group. This configuration was completed and implemented in 2018. The system was configured to handle the preparation and reporting on tax provisions, total tax contribution and tax risk registers. Training was offered to all tax teams across all MTN entities. Full adoption of the system is expected during 2019. The configuration of a tax system to further enhance our transfer pricing and country-by-country reporting is still under way and is expected to be completed during 2019.

Independent assurance review of group total tax contribution (TTC) numberAs part of our drive and commitment to improving transparency and to increase credibility to our TTC number, we engaged PwC to perform a limited assurance review of our total group TTC number in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits and Reviews of Historical Financial Information issued by the International Auditing and Assurance Standards Board. The assurance to this number has been marked throughout the report. For details of the scope of work, procedures and outcome of the review of the group TTC number, please refer to the independent assurance report on non-financial data and assurance definitions for non-financial data on our website www.mtn.com.

Adoption of King IV Report on Corporate GovernanceTM* (King IV Code) principlesSome of the main objectives of King IV are to:●● Promote corporate governance as integral to running an

organisation and delivering governance outcomes such as an ethical culture, good performance, effective control and legitimacy.

●● Reinforce corporate governance as a holistic and interrelated set of arrangements to be understood and implemented in an integrated manner.

●● Encourage transparent and meaningful reporting to stakeholders.

●● Present corporate governance as concerned with not only structure and process, but also with an ethical consciousness and conduct.

The King IV Code’s fundamental concept regarding tax is that:●● The governing body should be responsible for a tax policy

that is compliant with the applicable laws, but that is also congruent with responsible corporate citizenship, and that takes account of reputational repercussions.

King IV defines the governing body as, among others, the board of directors of a company, the board of the retirement fund, the accounting authority of a state-owned entity and municipal council. From a tax perspective in 2018, we strived to adhere to the King IV principles as follows:

●● Part 5.1: Leadership, ethics and corporate citizenship (Principles 1 to 3): Tax governance considerations

With the help of internal auditors, the group audit committee monitors adherence to the tax strategy and policy on a regular basis. A report on these audits is presented to the group audit committee.

●● Part 5.2: Strategy, performance and reporting (Principles 4 to 5): Tax transparency

When publishing the integrated report every year in March, we also publish a separate tax report. In the tax report we include detailed information about the group’s total tax contribution, on which we have obtained limited assurance from an independent external assurance provider since 2016.

We prepared and submitted our 2017 country-by-country report to SARS.

Refer to the ‘Tax technology improvement across MTN opcos’ section regarding the tax technology review and implementation progress as a drive to improve our performance, reporting and transparency.

●● Part 5.4: Governance functional areas (Principles 11 to 13 and 15): Tax function and tax risk framework consideration

The tax function is adequately resourced. However, with the drive to regularly review this, the tax structure for the whole MTN Group was presented at the group audit committee meeting in 2018. The committee was satisfied with the level of resourcing in the tax function.

In 2016, we had our updated group tax strategy and policy reviewed and approved at the group audit committee (and by the board of directors). Our tax strategy and policy stipulate MTN’s organisational risk appetite and risk level tolerance. As advised by the group audit committee, we have recently started the review of the group tax strategy and policy to ensure continued relevance in terms of tax governance and tax risk management.

The tax risk management framework is stipulated within the group tax strategy and policy.

In line with the tax strategy and policy, tax risk registers are updated regularly and reported to the audit committees on a quarterly basis.

●● Part 5.5: Stakeholder relationships (Principle 16): Tax stakeholder relationships

Our tax policy details guidance on how we should relate with our stakeholders to ensure a harmonious relationship that balances the needs, interests and expectations of our stakeholders and the best interest of MTN.

* Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved.


Total tax contribution and effective tax rates

The total tax contribution represents payments made by the MTN Group (including the MTN proportionate share of joint ventures and associates) to all spheres of governments within the regions in which we operate. The amounts represent actual cash payments made in the respective financial year rather than the tax charge as reported in the income statement.

Total value: R24,11 LA billion (2017: R27,9 billion) – 14,0% decrease

2018%

2017%

South Africa 10,0 12,1Nigeria 17,5 19,5SEAGHA2 28,5 23,8WECA3 29,5 24,3

MENA4 14,5 20,31 The R24,1bn group TTC number was independently assured. Please

refer to the integrated report link in our website www.mtn.com for the independent assurance report by PwC.

2 SEAGHA region: Uganda, Ghana, Rwanda, Zambia, South Sudan, MTN proportionate share in eSwatini and Botswana.

3 WECA region: Cameroon, Ivory Coast, Benin, Guinea-Conakry, Congo-Brazzaville, Liberia and Guinea-Bissau.

4 MENA region: Syria, Sudan, Yemen, Afghanistan, Cyprus and MTN proportionate share in Iran.

5 This relates to Mobile Telephone Networks (Pty) Ltd Group i.e. the South Africa operating company and its subsidiaries. It includes South Africa head office companies.

6 MTN Cyprus was sold in August 2018. Our information and numbers considered this and accounted for MTN Cyprus’s contribution from January to August 2018.

Total tax contribution by opco region

20182017

(Rbn)

30

25

20

15

10

5

0

◗ South Africa ◗ Nigeria ◗ SEAGHA ◗ WECA ◗ MENA

3,37 2,41

5,444,18

6,676,86

6,78

5,67

7,12

3,49

Country2018

Rm

Proportionate2018

%2017

Rm

Proportionate2017

%

South Africa5 2 410 9,84 3 373 12,08Nigeria 4 175 17,39 5 443 19,49

Uganda 1 833 7,64 1 502 5,38Rwanda 501 2,09 588 2,10Zambia 644 2,68 740 2,65South Sudan 72 0,30 36 0,13Botswana (joint venture) 100 0,42 102 0,37eSwatini (joint venture) 72 0,30 144 0,51Ghana 3 643 15,17 3 553 12,72

Total SEAGHA 6 864 28,60 6 665 23,86

Cameroon 1 608 6,70 1 239 4,44Ivory Coast 3 337 13,90 3 509 12,56Benin 783 3,26 472 1,69Guinea-Conakry 320 1,33 328 1,17Congo-Brazzaville 763 3,18 862 3,09Liberia 180 0,75 228 0,82Guinea-Bissau 124 0,52 140 0,50

Total WECA 7 116 29,64 6 778 24,27

Iran (joint venture) 1 284 5,35 1 195 4,28Syria 1 0,00 1 0,00Sudan 420 1,75 1 406 5,04Yemen 869 3,62 2 274 8,14Afghanistan 697 2,90 581 2,08Cyprus6 217 0,91 213 0,76

Total MENA 3 489 14,53 5 670 20,30

Total tax contribution 24 054 100 27 929 100


Total tax contribution and effective tax rates continued

Total tax contribution by region and tax type – 2018

◗ Corporate tax ◗ Education tax

◗ Operating licence fees ◗ Other

◗ Dividend tax ◗ Indirect tax ◗ WHT tax ◗ Payroll tax ◗ Property rates

(%)

51

30 0 1

00

0 0 0

1 0

46

80

4

55

52

14

11

5

0 01

02

11

07

1 9

93

16

9

1 5

92

0 29

8

46

5

1 34 16

4 1

92

26

7

55

73

69

6

40

5

18

99

0 1 6

952 3

89

36

3 85

70 3

2 16

0

06

85

30

3

1 2

59

19

3

100175

5 000

4 000

3 000

2 000

1 000

0

MENASouth Africa Nigeria SEAGHA WECA

1 This includes custom duties, excise duties, value-added tax, other indirect taxes and withholding taxes.

Total tax contribution collected by MTN

20182017

(Rbn)

3

2,38

1,76

1,14

0,52

(0,10)

◗ Product tax1 ◗ Payroll tax ◗ Dividend tax

0,3

0,9

(0,1)

1,4

1,1

1,2



Total tax contribution by country and regionThis table reflects the total of all tax amounts paid (in millions) in respect of the 2018 and 2017 financial years classified by opco country and region.

Group effective tax rate (GETR)

Consolidated group2018

%2017

% Comment

MTN Group 36,18 52,461 Refer to the GETR reconciliation below for more 2018 GETR comments.

Lower rate in 2018 mainly due to lower non-deductible Sudan expenses, unwinding of non-deductible Nigeria regulatory fine and related expenses, non-taxable gain on MTN Cyprus sale and the effect of higher profit before tax R15,01 billion (R9,571 billion in 2017) on fairly constant withholding tax.

GETR2018

%2017

% Comments

Reported group effective tax rate:

36,18 52,461

Main reconciling items:Other 0,952 (4,34)3

Sudan non-deductible expenses (2,55) (10,98) Turnover tax applied with result that bulk of operational expenses and loss not allowable for tax purposes, i.e. a tax at 5% of (Turnover and Other Income) less: (Interconnect, Roaming and Transmission costs, and commission and discounts). Lower impact in GETR because lower expense in 2018 (R1,37 billion gross amount and R3,8 billion in 2017).

Non-taxable gain on exchange right exercised

0,00 18,14 In 2017 this related to a gain realised on the exercise of IHS exchange rights. This profit offsets the loss on derecognition of IHS loan in H2 of 8,3%.

Non-deductible loss on derecognition of long-term loan receivable

0,00 (8,32)

Non-deductible CBN resolution expense

1,39 0,00

Non-taxable gain from MTN Cyprus sale

3,94 0,00 This relates to a gain realised of R2,11 billion on the sale of MTN Cyprus opco.

Nigeria regulatory fine and related expenses

(2,16) (4,53) This item includes unwinding interest on the Nigeria fine liability and the amortisation of fees related to the listing of MTN Nigeria. Lower impact to GETR due to lower Nigeria fine unwinding expenses in 2018 (R1,16 billion) compared to 2017 (R1,55 billion).

Foreign income and withholding taxes

(5,80) (9,09) Fairly similar withholding tax value. In 2018 (R0,871bn) compared to 2017 (R0,86bn). But lower impact to GETR due to higher PBT in 2018 (R15,0bn) compared to PBT of 2017 (R9,55bn).

Assessed loss and other timing differences on which deferred tax credit was not recognised

(1,73) (2,78) This relates mainly to denied deferred tax credits on assessed loses and other timing differences in South Sudan, Guinea-Conakry, Afghanistan and Liberia.

Non-deductible interest expenses

(2,22)4 (2,56)

Standard effective tax rate 28 281 The 2017 group profit before tax and effective tax rate was restated in the financial statements due to the changes in accounting policies.2 This mainly consists of: Share of losses from MTN joint ventures and associates (-0,98%); Nigeria investment allowances relief/Cameroon reinvestment

allowance (1,25%); Foreign tax rate adjustment to RSA standard rate (3,67%); Nigeria education tax (-1,99%); Ghana special levy – 5% of IFRS PBT (-1,01%); other non-deductible expenses (-2,23%); and other miscellaneous (1,09%).

3 This mainly consists of: Share of profits from MTN joint ventures and associates (2,46%); Nigeria investment allowances relief/Cameroon reinvestment allowance (2,41%); Goodwill Impairment (-7,71%); Foreign tax rate adjustment to RSA standard rate (12,24%); Nigeria education tax (-2,14%); Ghana special levy – 5% of IFRS PBT (1,56%); other non-deductible expenses (-4,51%); and other miscellaneous (1,09%).

4 This mainly relates to non-deductible interest expense incurred in Mobile Telephone Networks Holdings (Pty) Ltd and MTN International (Mauritius) Limited (two of the group’s holding companies).



Effective tax rates and standard corporate income tax rates by country

Country

2018 GETR1

%

2018 standard

corporate income tax

rates %

2017 GETR

%

2017 standard

corporate income tax

rates %

South Africa 26,782 28,00 30,393 28,00Nigeria 34,31 30,00 25,43 30,00Ghana 30,14 25,00 26,43 25,00Uganda 28,65 30,00 32,76 30,00Rwanda 46,27 30,00 (76,31) 30,00Zambia 44,41 40,00 24,77 40,00South Sudan – 20,00 – 20,00Botswana (joint venture) 5,25 22,00 4,39 22,00eSwatini (joint venture) 27,96 30,00 26,74 30,00Cameroon 12,36 33,00 190,99 33,00Ivory Coast (4 377,64)4 30,00 23,09 30,00Benin (0,52) 30,00 94,23 30,00Guinea-Conakry (1,56) 35,00 5,56 35,00Congo-Brazzaville 16,00 15,00 16,10 15,00Liberia (2,78) 25,00 5,6 25,00Guinea-Bissau (13,43) 25,00 (44,67) 25,00Iran (joint venture) 30,55 25,00 24,29 25,00Syria 18,16 14,00 12,50 14,00Sudan 28,62 5,00 (6,86) 5,00Yemen 176,15 50,00 178,44 50,00Afghanistan (36,04) 20,00 (14,59) 20,00

Cyprus 10,47 12,50 12,61 12,50

1 These are all based on ZAR currency converted profit before tax and income tax expenses and are for the group in the applicable countries.2 This relates to Mobile Telephone Networks (Pty) Ltd Group i.e. the South Africa operating company and its subsidiaries. It excludes South Africa head office

companies.3 This relates to Mobile Telephone Networks (Pty) Ltd Group i.e. the South Africa operating company and its subsidiaries. It excludes South Africa head office

companies.4 MTN Ivory Coast had an accounting loss but still levied tax due to non-deductible expenses incurred.


mtn group limited€¦ · group total tax contribution la r24,1bn 2017: r27,9bn reported group...

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