Telecoms giant, MTN Nigeria, yesterday
said its tax dispute Nigeria held the potential to improve the country’s tax
jurisprudence, strengthen her finance system, and ultimately improve confidence
in the business community. “Hence, stakeholders are watching keenly,” the
company said.
The telco recalled that on
October 20, 2023, the Lagos State division of the Tax Appeal Tribunal ordered
MTN Nigeria to pay the sum of $47,776,210 in taxes to the Federal Inland
Revenue Services (FIRS).
The ruling was delivered by a
five-man panel of the Tribunal led by A.B. Hamed in an appeal marked
TAT/LZ/VAT/075.
The matter began on September 4,
2018, when the then Attorney General of the Federation, Abubakar Malami
unilaterally imposed $2 billion in back taxes on MTN Nigeria, resulting in a
legal action by MTN Nigeria against the AGF. In 2020, the AGF referred the
matter to the Federal Inland Revenue Service (FIRS) and Nigeria Customs,
withdrawing the letter of demand for the aforementioned $2 billion issued in
2018.
A series of engagements between
FIRS and MTN led to the amount being revised to $93.6 million, comprising $72.6
million as principal liabilities and $21 million for penalties and interest.
MTN’s objection to this amount resulted in an upward review to $135.7 million,
comprising a principal tax liability of $47.8 million, while interest and penalty
amounted to $87.9 million.
With this development, MTN filed
an appeal at the Tax Appeal Tribunal.
MTN Nigeria submitted five
crucial issues to the Tribunal for determination. The first matter seeks to
establish whether, considering the clear and unequivocal provisions of the VAT
Act before the amendment by the Finance Acts, the provision of software, licensing,
and upgrades qualifies as a taxable supply of goods and services. The second
issue in question is whether the provision/lease of bandwidth capacities
through transponders located in the satellite qualifies as a taxable supply of
goods and services.
In addition, MTN is seeking clarity on whether, in the absence of the production of any false or untrue document or statement by MTN, the FIRS has the authority to conduct a tax investigation beyond the five-year restriction. Another aspect involves determining whether training provided by offshore facilitators outside of Nigeria is liable to VAT in Nigeria. The final point for consideration is whether the FIRS acted in error when it calculated and imposed interest and penalty on MTN's alleged non-remittance of VAT liabilities, considering that the said liabilities have not become final and conclusive.
The recent ruling of the Tax Appeal Tribunal appears to not exactly favour both parties in the matter. While it absolved MTN from paying the sum of $21,039,807 as penalties and interest on the principal sum, FIRS would wish to receive the sum.
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