Tribunal Orders MTN Nigeria to Pay $72.5m to FIRS

Emma Okonji

MTN Nigeria has lost its appeal case challenging an order by the Federal Inland Revenue Services (FIRS) mandating the telecoms company to pay for tax default to FIRS. 

This is as the Lagos State division of the Tax Appeal Tribunal has ordered MTN Nigeria to pay the sum of $72,551,059 in tax default to the FIRS, which covers 2007 to 2017.

However, the tribunal absolved the telecommunication firm from paying the sum of $21,039,807 as penalties and interest on the principal sum.

A five-man panel led by Prof. A. B. Hamed, gave the verdict and order Friday, last week, while delivering judgment in an appeal no: TAT/LZ/VAT/075, filed by the telecommunication company against the request by the FIRS to pay the default.

Other members of the panel were P. A. Olayemi, Babatunde Sobamowo, Samuel N. Ohwerhoye and Terzungwe Gbakighir.

On May 10, 2018, the Office of the Attorney General of the Federation (OAGF) issued a report of its investigation into MTN’s Forms A and M transactions. The report covered 2007 to 2017 accounting years.

But, 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), while the section relating to VAT and withholding tax (WHT) was revised $1.284 billion (Form A invisible transactions).

The processes also stated that sometime in mid-2020, the FIRS informed MTN that it had received a report from the OAGF in respect of its alleged liability on VAT and WHT.

FIRS consequently conducted 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.

Thereafter, in July 2021, the FIRS issued a VAT assessment of $93,590,366 to the MTN.

The assessment comprised the sum of $72,551,059, as the principal liability and $21,039,807 for penalties and interest on the principal sum (first assessment).

MTN objected to the first assessment whereupon FIRS further reviewed the assessment. 

Accordingly, by the Notice of Assessment dated April 14, 2022, the respondent issued another assessment of $135,697,755 to MTN as a revised assessment.

Although the principal amount of tax alleged to be outstanding and due from the appellant (principal tax liability) in the revised assessment, i.e. $47,776,210, was less than the alleged principal tax liability contained in the first assessment, i.e., $72,551,059m, the interest and penalty imposed by the FIRS on the alleged principal tax liability in the revised assessment, i.e. $87.900 million, is higher than the interest and penalty imposed by the FIRS on the alleged principal tax liability in the first assessment, i.e., $21,039,807.

Also, MTN by a letter of notice of objection dated May 13, 2022, objected to the FIRS’ revised assessment, and FIRS by a letter dated June 16, with ref. no. FIRS/TID/LOS/2020/0213/01, notified the MTN of its refusal to amend the revised assessment.

Dissatisfied with the FIRS’s amended revised assessment, MTN filed an appeal before the Tax Appeal Tribunal.

The appeal court, in its hearing on Friday, asked MTN Nigeria to pay the sum of $72.5 million, without paying the penalties and interest on the principal sum.