$47.8m Tax: MTN Seeks Answers to Five Crucial Issues at Tax Appeal Tribunal

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By Adedapo Adesanya

MTN Nigeria has released further details about its ongoing legal battle with the Federal Inland Revenue Service (FIRS) over the $47.8 million it was mandated to pay the agency by the Tax Appeal Tribunal.

Last month, the telco was asked to pay the sum of $47.8 million in tax defaults from 2007 to 2017 to the revenue agency.

The Tax Appeal Tribunal absolved MTN from paying the sum of $21,039,807 as penalties and interest on the principal sum, FIRS would wish to receive the money.

The company in a statement titled, MTN’s Tax Matter: Unveiling the Issues said it filed an appeal at the Tax Appeal Tribunal to challenge the October 20, 2023, judgment.

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 Value Added Tax (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, according to the filing, 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 5-year restriction.

Another aspect involves determining whether the training provided by offshore facilitators outside of Nigeria is liable to VAT in Nigeria.

The final point for consideration is whether the tax authority 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.

MTN, giving the origin of the dispute, said the matter began on September 4, 2018, when the then Attorney General of the Federation, Mr Abubakar Malami, unilaterally imposed $2 billion in back taxes on MTN Nigeria, resulting in a legal action by MTN Nigeria against the AGF.

It added that, “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.”

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