Orascom Telecom Holding, the Egyptian international telecommunications company has said it will challenge an Algerian demand for $596.6m in back taxes and penalties against its Algerian subsidiary, Orascom Telecom Algeria.
OTH said the demand was based on the “unfounded and unacceptable allegation that the company did not keep proper accounts” for the years 2005, 2006 and 2007.
According to OTH the Algerian tax authorities calculated its total revenue for the three years at $5.25bn versus the audited figure of $4.42bn.
The company said the methodology used to reconstitute its accounts was “completely arbitrary and groundless”.
It said it would “take all necessary legal steps to challenge the reassessment [of its tax liabilities] through all available administrative and judicial channels”.
OTH received the Algerian demand on Wednesday night in the midst of a wave of violence by football fans in Algeria against Egyptian nationals and business interests.
Angry mobs have destroyed 22 shops, a factory and data centres belonging to OTH’s Algerian subsidiary. Naguib Sawiris, the company’s chairman, said the losses ran into tens of millions of dollars.
The violence was sparked by an Egyptian victory over Algeria in a World Cup qualifier held in Cairo. Algerian fans and their team had been attacked by Egyptian football supporters before the match.
The Egyptian win meant the two teams finished joint leaders of their group and as a result of the violence surrounding the first match, the deciding game played on Wednesday was moved to the neutral venue of Khartoum, the Sudanese capital.
Egyptian companies are the largest investors in Algeria outside the oil sector, but there have been complaints since last year that the Algerian government has tightened conditions for foreign investors.
Measures introduced last year force companies which enjoyed tax exemptions to reinvest some of their profits in Algeria and a stipulation that all joint ventures should be majority-owned by Algerians.