MTN Nigeria to Challenge Tax Appeal Tribunal Ruling

MTN Nigeria to Challenge Tax Appeal Tribunal Ruling

MTN Nigeria said it is going to challenge the recent decision of Tax Appeal Tribunal (TAT) which last week current tax discord in its largest market, Nigeria. While delivering judgment in an appeal marked TAT/LZ/VAT/075, filed by MTN Nigeria, the five-man tribunal led by A. B. Hamed, had ordered the company to pay $72, 551, 059 in tax default to the Federal Inland Revenue Services (FIRS) dating back to 2007 to 2017.

A statement in response to the TAT ruling which the company filed to the Nigerian Exchange Limited early today, said “MTN Nigeria has resolved to appeal the decision of the Tribunal,” adding that it the company remained committed to meeting its tax obligations.

The telecom giant which, today (Monday), released its financial results for the third quarter ended 30 September, informed the capital market community of the TAT’s decision to uphold a principal VAT (Value Added Tax) liability of $47.8 million but giving forbearance of $87.9 million adjudged to have accrued as interest and penalty sum.

MTN said “the transactions in question primarily involved 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.”

The company therefore concluded that having reviewed this outcome and considering input from tax and legal consultants, MTN Nigeria has resolved to appeal the TAT’s decision.

The tax dispute between Nigerian government and the South Africa based telecoms giant started on May 10, 2018, after the office of the attorney-general of the federation issued a report detailing findings of its investigation into MTN’s Forms A and M transactions covering the period 2007 to 2017 accounting years.

However, in a revised report dated August 20, 2018, the OAGF adjusted the alleged outstanding in respect of import duty and VAT to the tune of N242.2 billion, (Form M -visible transactions) whilst the section relating to VAT and Withholding tax (WHT) was revised $1.284 billion (Form A invisible transactions).

In the middle of year 2020, MTN was notified by the FIRS that it had obtained a report from the OAGF regarding its potential VAT and WHT liabilities, and thereafter the FIRS went ahead to conduct a review of MTN’s tax and accounting records and upheld the OAGF’s alleged tax liability.

However, MTN and its tax consultant, KPMG Advisory Services, held a series of meetings with FIRS to resolve the tax dispute arising from MTN’s alleged tax liability but could not arrive at conclusive resolution.

Subsequently, in July 2021, the FIRS issued a VAT assessment of $93,590,366 million to the MTN including $21,039,807 million for penalties and interest on the principal amount and $72, 551,059 million which is the principal sum.

Following MTN’s objection to the initial evaluation, the FIRS further examined the assessment. As a result, the respondent sent MTN a revised assessment for $135,697,755 million through the Notice of Assessment dated April 14, 2022.

In the new assessment, the principal amount of tax was reduced to $47, 776, 210 million, while the interest was $87.900 million.

Although MTN still objected to the FIRS’s revised assessment, the revenue service refused to amend the revised assessment. Consequently, the telecommunications company filed an appeal before the Tax Appeal Tribunal.