Tribunal Orders Telco Giant To Pay $72.5 Million Tax Default To FIRS

Telecommunication giant, MTN Nigeria Communications has been ordered to pay $72,551,059 in tax default to the Federal Inland Revenue Services (FIRS).

Naija News gathered that a tax appeal tribunal in Lagos State ordered MTN to pay the $72, 551, 059 principal sum.

The tribunal’s five-member panel, led by A. B. Hamed, while delivering its judgement in an appeal marked TAT/LZ/VAT/075, filed by MTN Nigeria, absolved the telco from paying the sum of $21,039,807 as penalties and interest on the principal sum.

Recall that in May 2018, the office of the attorney-general of the federation issued a report detailing the findings of its investigation into MTN’s Forms A and M transactions.

The investigative report, as gathered, covered the 2007 to 2017 accounting years.

According to The Cable, the OAGF, in a revised report dated August 20, 2018, 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).

In 2020, FIRS notified MTN about receiving the report from OAGF, and it bothers around its potential VAT and WHT liabilities.

After this, the FIRS went ahead to conduct a review of MTN’s tax and accounting records and upheld the OAGF’s alleged tax liability.

Following the notification, 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 in July 2021, the FIRS issued a VAT assessment of $93,590,366m to the MTN. This assessment included $21,039,807 million for penalties and interest on the principal amount and $72, 551,059 million, which is the principal sum.

Following MTN’s objection to the initial evaluation, the FIRS further examined the assessment. As a result, the respondent sent MTN a revised assessment for $135,697,755 million through the Notice of Assessment dated April 14, 2022.

In the new assessment, the principal amount of tax was reduced to $47, 776, 210 million, with the interest being $87.900m.

Even though the telco giant still objected to the FIRS’s revised assessment, the revenue service refused to amend the revised assessment, which led to MTN filing an appeal before the tax appeal tribunal.

Delivering its verdict, the tax tribunal resolved four issues raised in favour of the FIRS, while it issued one in favour of MTN.

After reviewing all the processes filed by the parties, the tribunal gave its judgement concerning the five issues for determination.

It said, “Whether in view of the clear and unequivocal provisions of the VAT Act prior to the amendment by the Finance Acts, the provision of software licensing and upgrades qualified as 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.”