MTN Nigeria to Appeal $47.8 million Tax Bill

MTN Nigeria will challenge an order by the Nigerian Tax Tribunal to pay $47.8 million in taxes.

The evaluation pertains to a value-added tax assessment for the periods covering 2007 and 2010-17, as issued by the Federal Inland Revenue Service (FIRS) it said.

“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,” said Tobechukwu Okigbo, Chief Corporate Services and Sustainability Officer of MTN.

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 transactions 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 issued an initial assessment of US$93.6 million comprising US$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 US$135.7 million, representing a principal tax liability of US$47.8 million and interest and penalty of US$87.9 million.

The transactions in question 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, MTN Nigeria said.

“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,” Okigbo said.

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