MTN Nigeria has said it would appeal the judgement of the Lagos State division of the Tax Appeal Tribunal (TAT) ordering it to pay the sum of $48.7m (N57.23 billion), in tax default to the Federal Inland Revenue Services (FIRS).
The judgement, which was delivered on October 25, 2023, covers 2007 to 2017. The tribunal, however, absolved the telecom operator from paying the sum of $21,039,807 as penalties and interest on the principal sum.
In a filing MTN made to Nigerian Exchange on Monday, the telco showed that the latest assessment was a significant reduction from the amount the company was slammed by the Attorney General of the Federation (AGF), underscoring MTN’s insistence that it had been innocent all along.
“It is important to note that MTN’s argument has always been that we will follow established processes in this and any other tax dispute. Our robust challenge of the AG’s demand at the time was premised on tax issues being outside his remit,” said Tobechukwu Okigbo, chief corporate services and sustainability officer of MTN.
In 2018, the AGF and Minister of Justice issued a $2 billion tax bill relating to, among other things, import duties, VAT, and withholding taxes on imports and payments, which MTN rejected, saying it had cleared all amounts owing under the taxes in question.
The AGF withdrew from the case in 2020 and transferred the Form A-related transactions valued at $1.3 billion to the FIRS and the balance to the Nigerian Customs Service to resolve the contentious issues.
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According to MTN, a series of engagements with the FIRS led to an initial assessment and reduction of the fine to $93.6 million, comprising $72.6 million as principal liabilities and $21 million for penalties and interest on the principal amount. The telco said it had, by a letter of objection dated May 13, 2022, objected to this assessment, which led to a revised total assessment of $135 million, representing a principal tax liability of $47 million and interest and penalty of $87.9 million. The FIRS had replied by a letter dated June 16, with reference number FIRS.TID.LOS/2020/0213/01. It informed MTN of its refusal to amend the revised assessment.
In a bid to clarify the interpretation of the VAT Act’s provisions concerning the tax treatment of the transaction that led to the previous assessments, MTN filed for an appeal at the TAT.
“The transactions in question primarily involve the alleged VAT payable on offshore training services provided to employees of the company, transponder services provided by a non-resident company, and software licensing and upgrade,” the MTN filing noted.
The company is now moving to appeal the latest decision of the court.
“Disputes like this and how they are resolved, help build and strengthen the system, which makes it imperative for broader push for fiscal policy reforms which will improve affordability for consumers and incentivise investments by operators,” Okigbo said.
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