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Orascom faces $596m Algerian tax bill
19 November 2009
Orascom has to pay a huge tax bill for its Djezzy mobile network in Algeria, the Algerian national tax authorities are claiming. Orascom denies liability
Comment: Mobile phone companies can be highly profitable and they are often some of the richest corporations around in an emerging market. Orascom is not alone: Vodafone has also been fighting a long-running battle in India.
The Algerian tax authorities have told Orascom Telecom that it owes $596.6 million in outstanding taxes and penalties.
The Egyptian-owned company said the Algerian tax demand is based on an “unfounded and unacceptable allegation” that it did not maintain proper accounts in 2005-2007.
Orascom, which operates under the name Djezzy in Algeria, is planning to take legal action to challenge the assessment. Earlier, the Algerian tax regulator had alleged that Orascom’s local unit owed $50 million in taxes from 2004. The Egyptian company had disputed the charges.
Djezzy is believed to have a market share in Algeria close to 64%, competing with state owned Algeria Mobile Network and a local unit of Wataniya. Djezzy has over 14.5 million mobile telephone customers.
The tax claim may reduce 2010 dividends from Orascom’s Algerian unit. Orascom has been in a dispute with Algerian authorities over a new tax law requiring foreign firms to prove they do not owe tax before they can repatriate dividends. GTB