Technology giant, MTN, said it will appeal the ruling by a Lagos State division of the Tax Appeal Tribunal, which ordered it to pay a $47.8 million principal liability in a tax dispute with the Federal Inland Revenue Services.
The Tax Appeal court had last week in Lagos 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 Federal Inland Revenue Service’s request for payment of the unpaid tax.
MTN in a statement, signed by the Company Secretary, Uto Ukpanah, while notifying the Nigerian Exchange Limited and the investing public of receiving the decision of the Tax Appeal Tribunal (TAT) sitting in Lagos.
MTN explained: “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 $72.6 million as principal liability and US$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.
“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 October 20, 2023, the TAT upheld the principal liability of US$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,” it stated.
Further, MTN Chief Corporate Services and Sustainability Officer, Tobechukwu Okigbo, who emphasized that the firm will be appealing, noted that “it is a significant reduction from the amount the AG had demanded undergirding MTN’s insistence that we did nothing wrong.”
Okigbo said while 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 the broader push for fiscal policy reforms which will improve affordability for consumers and incentivize investments by operators.”
