Monrovia – In November 2018, French telecoms group Orange announced that the government of Niger ordered its offices shut over a tax dispute. The company, at the time, complained that the decision was brutal and disproportionate.
According to Orange, the government of Niger took the decision based on a “questionable” claim to 22 billion CFA francs ($38 million) in back taxes.
That incident triggered a drawn-out saga between the company and Niger that resulted in the Nigerien government issuing the company and ultimatum to pay their taxes or leave. As a result Orange sold 95 percent of its shares to a minority shareholder, Zamani Com S.A.S, who inherited the responsibility of paying the $US38 millon claim.
Zamani is wholly owned by Mr Mohamed Rissa of Rimbo Invest and Mr Moctar Thiam of Greenline Communications, both minority shareholders of Orange Niger.
Ruling Deals Major Blow to Orange
Despite initially flirting with the idea of leaving Niger, Orange remains there. The decision to offload majority of its shares to a minority shareholder was seen as a means of avoiding paying the taxes in Niger.
In fact, Orange’s services continues to be marketed under the Orange brand as the company has said that the Africa and Middle East region remain a strategic priority for the Orange Group.
In an act bordering similarity to Niger, Orange Liberia, in June this year, looking to subvert the imposition of regulatory surcharge fee, filed a Petition for a Writ of Prohibition before Supreme Court Justice Jamesetta Howard Wollokollie challenging an order issued by the Liberia Telecommunications Authority(LTA), the regulatory authority of the telecommunication sector in Liberia.
The appeal followed a June 2018 decision by the LTA to issue Order 0016-02-25-19, imposing floor prices and surcharges on one-net voice calls and data. Before issuing the Order, the LTA got all stakeholders involved and their inputs were considered. The LTA also conducted public consultations to be able to make informed decisions. Thereafter, the Order was finalized and took effect.
In a landmark ruling last Friday, the high court dealt a major blow to Orange, ruling that theLTA did not usurp the function of the Legislature when it published the imposition of surcharges on each minute of voice call and on each megabyte of internet data.
The surcharge is a government revenue generator from the telecommunications sector which was recently implemented to replace the 5 percent tax.
The surcharge also represents US$22 million on a turnover of US$93.3 million turnovers, with a big sum of that going to Orange France as management and royalties’ fees to avoid further paying local taxes.
The surcharge of US$0.008 for each minute of voice call and US$0,0065 for each megabyte of data was expected to be introduced in March this year – six months after the cancellation of the famous three days ‘free call’ and the introduction of a new floor pricing system.
Multiple sources told FrontPageAfrica at the weekend that inspite of LTA victory, the regulator is likely to consider discounting the invoice to reduce the amount the Mobile Network Operators will pay if they make an appeal for reduction.
In the case of Orange, a senior administration official said Sunday: “They just don’t want to pay the US$22 millon representing a significant increase in government revenue especially when Orange gross is US$93 millon, mostly during the COVID-19 pandemic when most other companies were losing money.
Liberia vs. Niger: Lots of Similarities
Niger, like Liberia is one of the world’s poorest countries but is much larger in size to Liberia with a population of 20 million to Liberia’s five million.
Like Liberia, the Nigerien market is also regarded as a small market for the French telecoms giant.
For Orange, the writing had been on the wall for quite some time. In June, Associate Justice Jamesetta Howard Wolokollie declined to grant Orange Liberia a Writ of Prohibition on the surcharge on voice call and mobile data bundle as the GSM Company remains adamant on adhering to the Liberia Telecommunications Authority (LTA) regulation.
Though the GSM Company, having lost an initial petition filed with the lower court and was awaiting a hearing into the appeal filed with the Supreme Court, Orange filed for another Writ of Prohibition upon receiving an invoice from LTA as the implementation of the surcharge took effect in March this year.
Orange insists that taxes owed Liberia represent US$22 millon out of $US93 millon. “That is their own number. That’s about 23 per cent of their gross,” the source explained. “The average corporate tax in liberia is 30 percent. So why are they complaining. They make about 70 million more and the government makes 20 millon more. I don’t see the disparity. Orange will not leave because the infrastructure is already on ground. They have made no new investment since taking from cellcom. If they do leave tons of companies will come in to fill the void. They made the same threats in niger when niger increased their taxes few years ago. But guess what, they still there.”
The signs were clear in the initial ruling in the lower court.
The Civil Law Court ‘B’ at the Temple of Justice had denied contentions raised by Orange –Liberia, challenging the Liberia Telecommunication Authority (LTA) order 0016-02-25-19 that was intended to establish price floors for on-net voice and data services, a regulatory fee on telecommunications goods and services, and a regulatory surcharge for on-net voice and mobile data services in May this year.
Judge Scheaplor R. Dunbar declared at the time that: “The petition for judicial review is denied and dismissed, and the resistance is sustained. The stay order of April 15, 2019 is lifted. LTA may proceed to enforce and implement the order,” adding costs ruled against Orange-Liberia.”
Judge Dunbar rejected Orange’s argument, ruling that the LTA’s order was promulgated in conformity with the Telecommunication Act of 2007, stressing “And that the said order does not violate any provision of the Revenue Code.”
The judge said LTA does not have to obtain the full agreement of all service providers and stakeholders before it can promulgate an order, rule or regulation.
Judge Dunbar’s ruling into the Writ of Prohibition filed by Orange Liberia at the lower court basically permitted the regulatory body to go on with the collection of the surcharges from the GSM Companies.
Judge Not in Error, High Court Rules
The high court agreed, unanimously with all members on the bench agreeing and adjudged that the word “surcharge” as used in the LTA’s Order published on February 25, 2019 is construed within the context of an imposition of additional fees or charges on data services and on-net voice calls under the authority of the LTA Act of 2007. The Court added that the imposition of the surcharges does not invade Legislature’s authority to levy tax.
“It was not the intent of the Legislature to preclude the appellee from imposing surcharges on data services and on-net voice when it repealed and amended Section 1165 (Mobile Telephone Usage) and 1022(B)(2) of the amended Revenue Code as amended in 2016,” the Supreme Court added.
According to the Bench, the trial judge was not in error when he held that Orange Liberia did not allege sufficient legal grounds for the granting of its petition for judicial review and that the LTA acted under its Act of 2007.
Economic Factor Not Prerogative of Court
The Supreme Court also noted that the argument on economic factor is not the prerogative of the Court, rather the technical and political actors. “We must add that question arising from public policies on the imposition of price and their accompanying economic impacts are addressed to the judgment of the technical and political actors hence not cognizable for judicial determination unless there is a clear showing of arbitrariness or that the administrative agency exceeded its jurisdiction touching on the imposition of price as required by law,” the Bench noted.
The latest setback for Orange comes in the backdrop of a stormy few months, that saw its Chief Executive Officer, Mr. Mamadou Coulibaly, summoned by the security apparatus in connection with an early morning violence on June 25, 2020, that damaged property and disrupted free movement on the Tubman Boulevard and the Old Road Community.
The company was accused of aiding and abetting the youth wing of the Council of Patriots who took responsibility for the attack.
The company, in a statement on June 29, 2020, assured the public that Orange Liberia stands by its policy of non-involvement in politics as it is the main rule of conduct within the Group worldwide. Under no circumstances does Orange support politics nor has the company or any of its executives been involved in political actions directly or indirectly.
As regards to the issue of the imposition of Surcharges, the company said at the time, that it had analyzed the impact of the Surcharges of the LTA Order 0016- 02-25-19 and concluded that these additional Surcharges imposed to GSM operators are jeopardizing their investments and their business continuity in Liberia. “Therefore, the Board of Orange Liberia instructed Mr. Mamadou Coulibaly, as CEO of the company, to make a case before the Courts of Liberia. Orange, as a law-abiding corporation, believes that the best recourse is always through the use of dialogue with the authorities and the rule of law.”
For now, it appears Orange finds itself dealing with yet another major setback in its quest to avoid paying taxes.
In Niger, the company explained that the market environment there had led Orange to make this decision responsibly, prioritising business continuity for the benefit of the company’s customers and protecting the interests of the women and men working at Orange Niger.
For the foreseeable future, it remains to be seen what Orange Liberia does moving forward. For the Liberian government, the high court ruling offers an opportunity to raise much-need cash for a struggling economy, drawing climax to a rather taxing legal wrangle senior administration officials say, should never have gone this far, or taken so long to resolve.
