Tax Tribunal orders MTN to pay $72.5m Tax Default to FIRS

The Lagos State Division of Tax Appeal Tribunal has ordered MTN Nigeria Communications to pay the Federal Inland Revenue Services the sum of $72, 551, 059.00 tax default covering years 2007 to 2017.

However, the Tribunal absolved the telecommunication firm from paying the sum of $21,039,807, as penalties and interest on the principal sum.

A five-man panel led by Professor A. B. Hammed, gave the verdict 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.

Other members of the panel were P. A. Olayemi, Babatunde Sobamowo, Samuel N. Ohwerhoye and Terzungwe Gbakighir.

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

But, in a revised report dated August 20, 2018, the Office of the Attorney General of the Federation adjusted the alleged outstanding in respect of import duty and VAT to the tune of N242.2 bn, (Form M -visible transactions) whilst the section relating to VAT and Withholding tax (WHT) was revised $1.284 bn (Form A invisible transactions).

The FIRS averred that it informed MTN that it had received a report from the OAGF in respect of its alleged liability to VAT and WHT and consequently conducted a review of MTN’s tax and accounting records and upheld the OAGF’s alleged tax liability.

However, MTN and its tax consultant, KPMG Advisory Services, held a series of meetings with FIRS to resolve the tax dispute arising from MTN’s alleged tax liability but all to no avail.

Thereafter, in July 2021, the FIRS issued a VAT assessment of $93, 590, 366m to the MTN. This assessment comprised the sum of $72, 551, 059m, as the principal liability and $21,039,807m, for penalties and interest on the principal sum (first assessment).

MTN objected to the first assessment whereupon the FIRS further reviewed the assessment. Accordingly, by the Notice of Assessment dated April 14, 2022, the FIRS issued a revised assessment for US $135,697,755m to MTN as a revised assessment. 

Also MTN by a letter of notice of objection dated May 13, 2022, objected to the FIRS’s revised assessment and notified the MTN of its refusal to amend the revised assessment.

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

While counsel to MTN urged the tribunal to determine the issues in its favour, FIRS counsel, who includes: Abu Ocheme Director Legal FIRS, Egodi Adedeji and Moses Ideho, urged the court to dismiss the MTN’s appeal, and determine the issues raised in FIRS’s favour.

In a well-considered judgment, the tribunal resolved the matter in favour of the FIRS and ordered MTN Nigeria Ltd to settle the assessed liabilities accordingly.

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