The Tanzania Revenue Authority (TRA) has won a USD 1.3 million (3bn/-) case against Vodacom Tanzania dating back almost two decades ago. Tanzania’s Court of Appeal delivered a ruling last week in which it rejected Vodacom’s appeal of TRA’s tax audit dating back to a three year period between 2001-2004.
Local media reported at the start of the week that, “…TRA, the respondent, conducted tax audit in respect of the appellant’s business affairs for the period covering the year 2001 to 2004.”
The findings of this audit were that Vodacom Tanzania was withholding tax and penalties related to services and royalty for use of software acquired from Siemens Telecommunications (PTY) Ltd.
“On November 10, 2006 the respondent served the appellant with preliminary audit findings…” in turn, on April 24, 2007, Vodacom Tanzania issued its own revised audit findings which TRA did not accept as correct.
The following year, on August 21, 2008, TRA issued the demand notices for withholding tax and penalties related to the use of the Siemens software. Vodacom counters the lodge with an appeal with the Tax Revenue Appeals Board. That appeal was dismissed the in a decision issued on August 21, 2015.
It is following that dismissal that Vodacom resorted to appeal with the Tribunal but again, the telecom giant lost. Now, with the final ruling, Vodacom owes TRA 3bn/- in withheld tax for the stated period.
Other Vodacom tax brushes with the law
This is not the first time that Vodacom, the largest telecom company in Tanzania by merit of subscribers, has had a brush with the Tanzanian government.
In an article published by Reuters last year (April 4th 2019) Vodacom Tanzania again locked horns with the government in a USD 4.76 million case linked to allegations of fraudulent use of network facilities.
In that case, the government of Tanzania named Vodacom’s Managing Director (along with other executives). The government said “Egyptian Hisham Hendi and other executives “intentionally and willfully organised a criminal racket, which caused the government … to suffer a pecuniary loss.”
The Managing Director and the executives were taken into custody and Vodacom was forced to appoint South African Jacques Marais, Acting Managing Director.
His first order of business was to reassure their clientele that “…the company’s operations continue free of interruptions.”
He also reassured the authorities that Vodacom Tanzania “…has initiated an internal investigation into the matter.”
Just before this latest ruling, Vodacom had its own law suit against Absa, the banking giant that has just acquired market in Tanzania.
According to Tech Central, Vodacom is “…suing Absa for losses of at least USD64.1-million it claims it incurred due to an alleged unauthorised payment by Absa’s Tanzanian subsidiary from Vodacom’s accounts to that country’s tax agency last year.”
In an article published by the online news portal on 6 April 2020 , it is stated that “ Vodacom is also demanding that Absa pay it USD 221.9-million for allegedly defaulting on a terms of a guarantee signed between the parties last year.
The article notes that in total, “Vodacom is suing Absa for as much as USD286-million…” and is demanding the bank to indemnify it against the loss of USD64.1-million or more and pay it out the guaranteed USD 221.9-million.”
Efforts to reach Vodacom Tanzania for comments did not bare fruit. When provided, The Exchange will publish the Vodacom stand on these allegations and the ruling of the court of appeal in the TRA case.