MORE TAX ACADEMY

CHARTERED INSTITUTE OF TAXATION [GHANA]

FEBRUARY 2018 PREPARATORY EXAMS

FINAL 1 PAPER 9

INTERNATIONAL TAXATION

ASSIGNEMENT

DATE OF SUBMISSION IS 21ST DECEMBER 2017

Email to: Moretaxacademy@gmail.com

You should complete Chapter 2 of the 2017 OECD TP Guidelines before attempting the
question. The 2015 Final Reports of the OECD Base Erosion and Profit Shifting
Project will also be useful if you have glanced through it. You will be able to answer
the questions.

NB:
EXAMINATION STARTS 5 TH FEBRUARY 2017

Lecturer: Timore Francis Boi

QUESTION 1

MTN Group was established in Ghana in 1994. It got listed on the Ghana Stock exchange
in 2017. It is the holding company of MTN group with a number of subsidiaries in 21
countries.

MTN Group manufactures and distributes branded mobile phones. Areeba International
owns all the trademark and intellectual properties relating to all phones. The intellectual
property helps the group in its marketing strategies of the phones which enables its charge a
premium price over competitors Tigo-Airtel, Vodafone, Glo and Kasapa. As you are already
aware, the Tech industry is ever changing and so advertising is crucial to enables it
maintain its 55% market share in Ghana. Due to this, MTN Group’s targets a
marketing spend of 15% of net sales.

MTN Group sells its phones through wholesalers, and dealers across the continent in 25
countries. One key strategic plan is that, the group has centralized some key functions,
such as procurement, logistics, research and development, contract manufacturing,
treasury and technical services.

Since the company is listed on the Ghana Stock Exchange, you obtained t h e following
information in one of their disclosure documents, showing the financial performance
of the key subsidiaries of MTN Group.

Entity Net Sales ($m) Net Profit Net Profit as % of Total

Margin Assets

Areeba International 15 2% 1%

10 13% 15%
MTN Nigeria
40 19% 20%
MTN South Africa
11% 11%
MTN Cote-Di’voir 12
-8% -4%
MTN Uganda 20

Additional information, in relation to the functions undertaken by key subsidiaries in the

Group

Entity Description of entity activities

Areeba International Retail sales to third parties in the Ghana; group IP
ownership; managerial service provision to all group
entities; technical service provision to MTN South Africa.

MTN Nigeria Retail sales to third parties in Nigeria & Togo.

MTN South Africa Sales to MTN Group companies; research and

MTN Cote-Di’voir
development for
Areeba International; group procurement and logistics;
product manufacture.
Product distribution to third party wholesalers in numerous
countries.

MTN Uganda Retail sales to third parties in the Tanzania and Zimbabwe.
 You are required to answer the following questions relating to the MTN
Group,
1. Identify the international related party transactions within the group.
[5 marks)

2. With regard to the arm’s length principle, what transfer pricing risks should
the GRA consider?[5marks]
3. For each international related party transaction undertaken by the following
entities, which transfer pricing methodology is the most appropriate? You
should provide reasons in support of each answer.

a. Areeba International [6 marks]

b. MTN Nigeria [ 3 marks]
c. MTN South Africa[6 marks]