Introduction: The Lagos State division of the Tax Appeal Tribunal has ruled that MTN Nigeria Communications must pay a sum of $72,551,059 in tax default to the Federal Inland Revenue Services (FIRS) for the period spanning 2007 to 2017. This decision comes after a legal battle between MTN and the FIRS regarding the company’s tax liability.
Key Points:
- Tax Default and Ruling:
- The Tax Appeal Tribunal has directed MTN Nigeria to remit $72,551,059 to the FIRS to settle a tax default covering the period from 2007 to 2017. However, the company has been absolved of paying an additional $21,039,807 in penalties and interest on the principal sum.
- Background of the Case:
- In May 2018, the Office of the Attorney General of the Federation (OAGF) initiated an investigation into MTN’s Forms A and M transactions, covering the accounting years from 2007 to 2017. A revised report in August 2018 adjusted the alleged outstanding amounts for import duty and VAT.
- FIRS Assessment and Dispute Resolution:
- Following the OAGF’s report, the FIRS conducted a review and upheld the alleged tax liability. MTN, along with its tax consultant KPMG Advisory Services, engaged in discussions with the FIRS to resolve the tax dispute. In July 2021, the FIRS issued a VAT assessment of $93,590,366 to MTN, comprising principal liability and penalties.
- Revised Assessment and Objection:
- MTN objected to the initial assessment, prompting the FIRS to conduct a further review. Subsequently, a revised assessment of $135,697,755 was issued to MTN in April 2022. Although the principal tax liability was lower, the interest and penalty imposed were higher than in the initial assessment.
- Tribunal’s Verdict:
- The Tax Appeal Tribunal considered the arguments presented by both MTN and the FIRS. It resolved four key issues in favor of the FIRS, affirming the assessed liabilities. However, the tribunal ruled in favor of MTN on the issue of penalty and interest, setting aside this aspect of the FIRS’s claim.
Conclusion: The Tax Appeal Tribunal’s decision mandates MTN Nigeria to settle a tax default of $72.5 million with the FIRS. While this ruling resolves a significant portion of the dispute, it highlights the complexities surrounding tax assessments and liabilities for large corporations operating in Nigeria. The case emphasizes the importance of clear regulatory frameworks and dispute resolution mechanisms in tax matters.
