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Tax Default: MTN Rejects Tribunal Ruling on $47.8 Million VAT Award To FIRS

Tax Default: MTN Rejects Tribunal Ruling on $47.8 Million VAT Award To FIRS

MTN Nigeria Communication Plc has rejected the judgment of the Tax Appeal Tribunal which upheld the principal payment of Value Added Tax liability of $47.8m that the company will remit to the Federal Inland Revenue Service.

A five-man panel of the Lagos state division of Tax Appeal Tribunal led by Professor A. B. Hamed, gave the judgment which compels MTN to pay $47.8m while setting aside the $87.9m interest and penalty charges that accrued from the tax default.

The judgment was in an appeal numbered TAT/LZ/VAT/075, filed by MTN against the request by the FIRS to pay tax default from 2007 and 2010-2017.

MTN said, “On 20 October 2023, the TAT upheld the principal liability of US$47.8 million and set aside the interest and penalty charges of US$87.9 million. Having reviewed this outcome and considering input from our tax and legal consultants, MTN Nigeria has resolved to appeal the decision of the Tribunal. We remain committed to meeting our tax obligations.”

In 2018, the Attorney General of the Federation and Minister of Justice (AGF) demanded approximately $2bn in tax arrears from the Company.

The transactions involve 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.

In 2020, the AGF withdrew from the case and transferred the Form A-related transactions valued at $1.3bn to the FIRS and the balance to the Nigerian Customs Service (NCS) to resolve the contentious issues.

MTN said after a series of engagements, the FIRS issued an initial assessment of $93.6m comprising $72.6m as principal liability and $21m for penalties and interest on the principal amount.

MTN Nigeria objected the case which led to the FIRS to issue a revised total assessment of $135.7m, representing a principal tax liability of $47.8m and interest and penalty of $87.9m.

About Bukola Olanrewaju

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