Tax tribunal orders MTN to pay FIRS $72.6m

It was a win-win situation for both MTN Nigeria and the Federal Inland Revenue Service (FIRS) as the Tax Appeal Tribunal sitting in Lagos ordered the telecommunications giant to pay the sum $72,551,059 in unpaid tax but ruled that it is not liable to pay $21,039,807 as penalties and interest on the principal tax amount.

The amount is said to be unpaid taxes between 2007 and 2017.

The verdict was delivered by a five-person panel led by Professor A. B. Hamed in response to an appeal (TAT/LZ/VAT/075) filed by MTN Nigeria against the FIRS’s request for payment of the outstanding tax.

The case arose from a report issued by the Office of the Attorney General of the Federation in May 2018, which investigated 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 import duty and value-added tax (VAT) to N242.2 billion for Form M-visible transactions and $1.284 billion for Form A-invisible transactions.

In July 2021, the FIRS issued a VAT assessment of $93,590,366 million to MTN Nigeria, comprising $72,551,059 million as the principal liability and $21,039,807 million for penalties and interest on the principal sum (first assessment).

MTN Nigeria objected to the first assessment, leading to a further review by the FIRS. In a notice of assessment dated April 14, 2022, the FIRS issued a revised assessment of $135,697,755 million to MTN. While the principal tax liability in the revised assessment was lower than the first assessment at $47,776,210 million, the interest and penalty imposed by the FIRS in the revised assessment were higher at $87.9 million.

MTN Nigeria lodged an objection to the revised assessment, which was refused by the FIRS in a letter dated June 16, 2022. The Tax Appeal Tribunal, after considering all the submitted documents and citing legal authorities, ruled in favor of the FIRS on issues one to four and ordered MTN to settle the assessed tax liabilities. However, it ruled in favor of MTN on issue five, which concerned penalty and interest, and set aside the related penalties.

MTN has been ordered to pay the assessed tax liability of $72,551,059 while being relieved of the associated penalties and interest.