There appears to be similarities in the tax strategies of Vodafone in Australia and Ghana – two countries on different continents with different tax systems. A tax strategy is what companies use to reduce their tax liabilities.
In Australia the mobile provider is known as Vodafone Hutchison while in Ghana it is simply known as Vodafone.
While Vodafone controls sizeable chunks of the mobile market in these countries, it says it is making losses and therefore hasn’t paid income tax for as long as it existed in these countries.
It is reported that in the last three years, even though Vodafone made $11.8 million in total income in Australia, it hasn’t declared taxable income and therefore has paid no tax.
In Ghana, Vodafone had a turn-over of about GH¢540 million (which is roughly $120 million) over three years from 2014 to 2016, has declared no taxable income and so has paid no income tax. Indeed, it hasn’t ever declared taxable income since it started operations in Ghana in 2009.
Vodafone Ghana has been unwilling to share its financial statements, so it’s difficult to determine how its accounts look like.
But the Ghana Revenue Authority seems to have an idea of what it looks like, and based on that, the Authority has assessed a 30 per cent tax liability of some GH¢160 million on Vodafone under transfer pricing rules. But Vodafone has disputed that and has gone to court to seek to overturn the decision.
The Authority also says Vodafone has remitted some GH¢2.1 billion (about $500 million) to its parent company within that three year period.
Meanwhile, an Australian blogger, Michael West has said in January 2018 that as of last balance date, Vodafone Hutchison had $668 million in payables owed to related parties. It also showed $570 million in swaps with a Hutchison Whampoa and $570 million in swaps with its ultimate parent Vodafone Plc. These siphoned out $44 million overseas last year, he wrote.
According to West, Vodafone doesn’t name the parties it has these deals with, it only says a number of parties.
He further states that the only thing that is known is that income is going out of Australia to other countries through these related party transactions.
By Emmanuel K. Dogbevi
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