MTN Nigeria Communications Plc (“MTN Nigeria”) has rejected the last week’s Lagos state division of Tax Appeal Tribunal ruling which ordered the company to pay the sum of $72, 551, 059, in tax default to the Federal Inland Revenue Service (FIRS).
In a statement available to Techeconomy titled: “The Ruling of the Tax Appeal Tribunal”, the company said it has reviewed the ruling of the TAT and decided to appeal.
The courts decision pertains to the Value Added Tax (VAT) deductions for the period covering 2007 and 2010 – 2017, as issued by the FIRS to the Company.
A statement signed by Uto Ukpanah, the company secretary, reads:
“In 2018, the Attorney General of the Federation and Minister of Justice (AGF) demanded approximately US$2 billion in tax arrears from the Company.
In 2020, the AGF withdrew from the case and transferred the Form A-related transaction valued at US$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 issues an initial assessment of US$93.6 million comprising US72.6 million as principal liabilitt and US$21 million for penalities and interst on the principal amount. Following an objection by MTN Nigeria and further enagements, the FIRS issues a reversed total assessment of US135.7 million, reprenting a principal tax liability of US$47.8 million and interest and penality of US$87.9 million.
To clarify the interpretation of the VAT Act’s provisions concerning the tax treatment of te transaction that led to the aformentioned assessments, MTN Nigeria filed an appeal at the TAT. The transactions in question primarily involve the alleged VAT payable on offshore training serbices provided to employees of the Company, transponder services provided to the non-resident company, and software licensing and upgrades.
On 20 October 2023, the TAT upheld the principal laibility of US$47.8 million and set aside the interest and penalty charges of US$87.9 million. Having reviewed this ourcome 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”.
Signed,
Uto Ukpanah, FCIS
Company Secretary
Tobechukwu Okigbo, Chief Corporate Services and Sustainability Officer of MTN, also confirmed the development.
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He said: “We are appealing”.
“This is a significant reduction from the amount the AG had demanded undergirding MTN’s insistence that we did nothing wrong;
“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 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;
“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 incentivize investments by operators”.
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