MTN Nigeria ordered to pay N57.2 billion in tax default to FIRS

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The Lagos State Division of the Tax Appeal Tribunal has ruled that MTN Nigeria Communications must pay the sum of N57.2 billion ($72,551,059) in tax default to the Federal Inland Revenue Service (FIRS). The tribunal’s verdict covers the tax arrears for the years spanning from 2007 to 2017.

A five-member panel, led by Professor A. B. Hamed, issued the judgment on Friday, following an appeal numbered TAT/LZ/VAT/075 filed by the telecommunication company challenging the FIRS’s request to settle the outstanding tax.

However, the tribunal absolved MTN Nigeria from paying the sum of $21,039,807, which was associated with penalties and interest on the principal tax amount. Other members of the panel included P. A. Olayemi, Babatunde Sobamowo, Samuel N. Ohwerhoye, and Terzungwe Gbakighir.

The origin of this matter can be traced back to May 10, 2018, when the Office of the Attorney General of the Federation initiated an investigation into MTN’s Forms A and M transactions, which pertained to the accounting years from 2007 to 2017.

The Office of the Accountant General of the Federation (OAGF) alleged an outstanding import duty and VAT of N242.2 billion for Form M-visible transactions. In a revised report dated August 20, 2018, the OAGF adjusted the figures, reducing the outstanding amount to $1.284 billion for Form A invisible transactions.

This ruling by the Tax Appeal Tribunal has significant financial implications for MTN Nigeria and underscores the importance of adherence to tax regulations by multinational corporations operating in Nigeria.

The tax dispute between MTN and FIRS

In mid-2020, the Federal Inland Revenue Service (FIRS) informed MTN about a report from the OAGF regarding its alleged VAT and WHT liability. Subsequently, the FIRS reviewed MTN’s tax and accounting records, confirming the alleged tax liability. MTN, along with its tax consultant KPMG Advisory Services, engaged in meetings with FIRS to resolve this tax dispute. In July 2021, FIRS issued a VAT assessment of $93,590,366m to MTN, consisting of $72,551,059m as the principal liability and $21,039,807m for penalties and interest (first assessment).

MTN objected to the first assessment, leading to a further review by FIRS. On April 14, 2022, FIRS issued a revised assessment of $135,697,755m to MTN. While the principal tax liability in the revised assessment was lower at $47,776,210m compared to the first assessment, the interest and penalty imposed in the revised assessment, $ 87,900m, were significantly higher than the first assessment’s interest and penalty.

MTN lodged an objection to the FIRS’s revised assessment in May 2022, but FIRS, in a letter dated June 16, 2022, refused to amend the revised assessment.

Read More: MTN Nigeria raises N125bn via commercial paper notes to boost its working capital

Challenging FIRS’s amended assessment

MTN, dissatisfied with the FIRS’s revised assessment, initiated an appeal before the Tax Appeal Tribunal. After reviewing all the documents submitted by both parties, the tribunal identified five key issues to address. One of these issues was whether, based on the pre-amendment provisions of the VAT Act, the provision of software licensing and upgrades could be considered a taxable supply of goods and services.

“Whether the provision/lease of bandwidth capacities by Intelsat Global Services & Marketing Ltd, a non-resident entity, through transponders located in the satellite, qualifies as a taxable supply of goods and services.


“Whether in the absence of the production of any false or untrue document or statement by the Appellant, the Respondent has authority to conduct a tax investigation beyond the 5-year restriction.

“Whether training provided by offshore facilitators outside of Nigeria is liable to VAT in Nigeria.

“Whether the Respondent acted in error when it calculated and imposed interest and penalty on the Appellant’s alleged non-remittance of VAT liabilities, the said liabilities having not become final and conclusive.”

Tribunal’s Verdict and Resolution to MTN

Counsel for MTN urged the tribunal to decide in their favour, while FIRS counsel, including its Director of Legal, Abu Ocheme, Egodi Adedeji, and Moses Ideho, called on the court to dismiss MTN’s appeal and uphold the FIRS’s stance.

After considering arguments from both sides, the tribunal ruled in favour of FIRS on issues one to four, while issue five was decided in MTN’s favour.

Upon a thorough examination of all submitted documents and reference to legal authorities, the tribunal concluded, stating:

“In the final analysis, it is the decision of the Tribunal that issues one to four discussed above are all resolved in favour of the Respondent, and the appellant is therefore ordered to settle the assessed liabilities accordingly. However, issue five in relation to penalty and interest is resolved in favour of the Appellant and is therefore set aside by this Honourable Tribunal.”

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