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Alleged FIRS tax deduction on multi-billion fine: MTN says matter before Tax Tribunal

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MTN and FIRS
MTN Nigeria Communications Plc., has clarified matters regarding status of taxes related to the 2015 fine.

The network operator in an email to TechEconomy.ng acknowledged that there is a technical disagreement between MTN and the Federal Inland Revenue Service (FIRS) as to how the fine should be treated for tax purposes.

The Company said, however, while the monies have been paid to FIRS, they have taken the disagreement to the Tax Tribunal set up by FIRS Chairman and Minister of Finance, and are awaiting a decision.

Recall that PremiumTimes had on Thursday this week reported that despite paying the N330 billion fine imposed on it for its failure to comply with regulatory directives in 2013, MTN Nigeria still has one issue to resolve over the matter.

The online newspaper attributed the report to the Federal Inland Revenue Service (FIRS) Chairman, Tunde Fowler.

Mr Fowler said the management of the telecoms firm has since been told such deductions cannot be made, as fines and penalties for regulatory infractions are revenues to the federal government and are not subject to any tax deduction.

“The MTN took a position that the fine or penalty should be tax-deductible. (But), the FIRS said that does not make sense.

“One cannot be given a penalty or fine, which is a punitive measure, and the company is saying it is tax-deductible so that it will get a tax credit on that,” Mr Fowler said.

Although MTN made the payment, Mr Fowler said the FIRS position that the fine and penalty cannot be considered as a tax-deductible item will not change.

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“Initially they (MTN) made the payment on account. The FIRS said, no, it is not on account, but it is tax due to government,” he said.

“The alternative is for MTN to go to court and let the court (maybe Supreme Court) say the FIRS was wrong, and that such fines or penalties are tax-deductible,” he said.

But in a reaction to the report, MTN said, “Our attention has been drawn to media reports regarding the status of taxes relating to the 2015 fine imposed on MTN Nigeria Communications Plc (MTN).

“We acknowledge that there is a technical disagreement between MTN and the Federal Inland Revenue Service (FIRS) as to how the fine should be treated for tax purposes. However, while the monies have been paid to FIRS, we have taken the disagreement to the Tax Tribunal set up by FIRS Chairman and Minister of Finance, and are awaiting a decision.

“MTN remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal. The company is committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria.

“Since incorporation in 2001, MTN has invested more than NGN2 trillion into the Nigerian economy and has paid more than NGN 1.7 trillion in taxes, levies and other regulatory fees”.

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