MTN Nigeria Communications Plc on Monday, October 30, said it has appealed the decision of the Tax Appeal Tribunal (TAT) over the payment of $47.8million fine to the Federal Inland Revenue Service (FIRS).
Recall that TAT, sitting in Lagos had last week ordered the telco to pay $47.8 million in overdue taxes.
TAT claimed the amount is for unpaid taxes between 2007 and 2017.
A five-person tribunal rendered its decision in response to an appeal filed by MTN Nigeria against the FIRS’ request for payment of the unpaid tax.
Reacting to the decision, Chief Corporate Services and Sustainability Officer at MTN Nigeria, Tobechukwu Okigbo, 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.”
Meanwhile, MTN Nigeria has released results for the quarter ended September 30, updating the markets of the TAT’s decision to uphold a principal VAT liability of $47.8 million.
The telco recognized additional unrealized forex losses on outstanding matured trade obligations and increased net finance costs for the six months through June after incorrectly measuring them before, it said in a statement on Monday.
That means MTN Group’s earnings per share for the first half were also restated and are now 13per cent lower than the Johannesburg-based company reported previously.
In a note to the Nigerian Exchange Limited and the investing public, the carrier said it received the decision of the TAT sitting in Lagos, adding that the decision pertains to the VAT assessment for the periods covering 2007 and 2010 – 2017, as issued by the FIRS to the company.
Company Secretary, Uto Ukpanah, in a statement, recalled that in 2018, the Attorney-General of the Federation and Minister of Justice (AGF) 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 $93.6 million comprising $72.6million 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.
He said: “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 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 TAT; we remain committed to meeting our tax obligations.”