MTN Nigeria has decided to appeal the recent ruling by the Lagos State division of the Tax Appeal Tribunal, which ordered the telecommunications giant to pay a total sum of $47.8 million in tax default to the Federal Inland Revenue Services (FIRS). The tax assessment covers the period from 2007 to 2017.
In a statement released on Monday and signed by Uto Ukpanah, the Company Secretary, MTN Nigeria, the company expressed its dissatisfaction with the Tribunal’s decision.
The statement outlined the company’s decision to challenge the ruling, emphasizing its commitment to following established processes in all tax-related matters.
“On 20 October 2023, the Tax Appeal Tribunal (TAT) upheld the principal liability of $47.8 million and set aside the interest and penalty charges of $87.9 million. Having reviewed this outcome and considering input from our tax and legal consultants, MTN Nigeria has resolved to appeal the decision of the Tribunal,“ the statement read.
“MTN Nigeria Communications Plc hereby notifies the Nigerian Exchange Limited and the investing public that the company received the decision of the TAT sitting in Lagos.
“The decision pertains to the VAT assessment for the periods covering 2007 and 2010 – 2017, as issued by the FIRS to the company.”
Ukpanah pointed out that in 2018, the Attorney General of the Federation and Minister of Justice (AGF) had demanded approximately $2 billion in tax arrears from the company.
“In 2020, the AGF withdrew from the case and transferred the Form A-related transactions valued at $1.3 billion to the FIRS and the balance to the Nigerian Customs Service (NCS) to resolve the contentious issues.
“After a series of engagements, the FIRS issued an initial assessment of US$93.6 million comprising $72.6 million as principal liability and $21 million for penalties and interest on the principal amount. Following an objection by MTN Nigeria and further engagements, the FIRS issued a revised total assessment of $135.7 million, representing a principal tax liability of $47.8 million and interest and penalty of $87.9 million,” the statement added.
According to MTN, “to clarify the interpretation of the VAT Act’s provisions concerning the tax treatment of the transactions that led to the aforementioned assessments, MTN Nigeria filed an appeal at the Tax Appeal Tribunal (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 upgrades.
“On 20 October 2023, the TAT upheld the principal liability of $47.8 million and set aside the interest and penalty charges of $87.9 million. Having reviewed this outcome and considering input from our tax and legal consultants, MTN Nigeria has resolved to appeal the decision of the Tribunal. We remain committed to meeting our tax obligations,” the statement also said.
MTN Nigeria’s appeal focuses on the interpretation of the VAT Act’s provisions concerning tax treatment, particularly related to offshore training services, transponder services, and software licensing and upgrades.
Tobechukwu Okigbo, Chief Corporate Services and Sustainability Officer at MTN Nigeria, stressed that the company’s response to the tax dispute aligns with its commitment to adherence to due process.
Okigbo emphasized the importance of resolving disputes to strengthen the system and advocated for broader fiscal policy reforms to benefit consumers and incentivize industry investments.
“Tax disputes are normal. The process of resolving these disputes, when and if they arise, is very important and MTNN is just following that process;
“It is important to note that MTN’s argument has always been that it 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. Disputes like this and how they are resolved helps 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.
