MTN ordered to pay N57.5bn tax default to FG

The Tax Appeal tribunal sitting in Lagos has ordered MTN Nigeria Communications Limited to pay $72,551,059 million (N57.5bn at N795 to a $1) in tax default to the Federal Inland Revenue Services (FIRS), between the years 2007 to 2017.

The panel freed the telecommunication firm from paying the sum of $21,039,807 million, as penalties and interest on the principal sum.

A five man-panel led by Professor A. B. Hamed, made the above declaration and order, while delivering judgment in an  appeal numbered TAT/LZ/VAT/075, filed by the telecommunication company against the request by the FIRS to pay the default.

The crux of the matter according to the processes filed for the appeal, was that sometimes in May 10, 2018, the Office of the Attorney General of the Federation (OAGF) issued a report of its investigation into the MTN’s Forms A and M transactions. The report covered 2007 to 2017 accounting years.

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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).

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

FIRS consequently conducted a review of the MTN’s tax and accounting records and upheld the OAGF’s alleged tax liability.

But MTN and its tax consultant, KPMG Advisory Services, held a series of meetings with the FIRS to resolve the tax dispute arising from the MTN’s alleged tax liability.

Thereafter, in July, 2021, the FIRS issued a VAT assessment of $93.6million, to the MTN. This assessment comprised the sum of $72.6million as the principal liability and $21million for penalties and interest on the principal sum (first assessment).

However, MTN objected to the first assessment whereupon the FIRS further reviewed the assessment. Accordingly, by the Notice of Assessment dated April 14, 2022, the Respondent issued a revised assessment for $135.7million to MTN as revised assessment.

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

The tribunal after perusing all the processes filed by parties, ordered  the appellant  to settle the assessed liabilities accordingly.