MTN Nigeria Communications has been ordered by the Lagos State division of the Tax Appeal Tribunal to pay $72,551,059 in unpaid taxes to the Federal Inland Revenue Services from 2007 to 2017.
The Tribunal did not require the telecommunications company to pay the $21,039,807 in fines and interest on the principal amount, nevertheless.
The verdict and order were recently made by a five-person panel headed by Professor A. B. Hamed in a case involving an appeal with the file number TAT/LZ/VAT/075 that the telecommunications company had brought against the FIRS’s demand that it pay the default.
The Office of the Attorney General of the Federation released a report of its investigation into the Forms A and M transactions of the MTN sometime on May 10, 2018, according to the processes submitted before to the appeal. The study covered the fiscal years 2007 through 2017.
However, in a revised report dated August 20, 2018, the OAGF revised the section relating to VAT and Withholding tax (WHT) to the tune of $1.284 billion (Form A invisible transactions), while adjusting the alleged outstanding in respect of import duty and VAT to the tune of N242.2 billion (Form M -visible transactions).
The MTN was assessed $93, 590, 366 million in VAT by the FIRS in July 2021. This first assessment included a primary debt of $72,551,059 million and a penalty and interest component of $21,039,807 million.
Following MTN’s objection to the initial assessment, the FIRS further assessed the evaluation.
As a result, the Respondent issued a revised assessment to MTN for US $135,697,755m via the Notice of Assessment dated April 14, 2022.
However, the interest and penalty levied by the FIRS on the alleged principal tax liability in the revised assessment, i.e., $87.900 million, is higher than the interest and penalty levied by the FIRS on the alleged principal tax liability in the first assessment, i.e., $72,551,059 million. This is because the principal amount of tax alleged to be outstanding and due from the appellant in the revised assessment, i.e., $47, 7
Additionally, MTN protested to the FIRS’s new assessment in a letter dated May 13, 2022, and the FIRS informed MTN in a letter dated June 16 with reference number FIRS/TID/LOS/2020/0213/01 that it would not be changing the revised assessment.
The Tribunal, following a consideration of all the processes filed by parties and citing a plethora of authorities, held that:
“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 concerning penalty and interest is resolved in favour of the Appellant and is therefore set aside by this Honourable Tribunal. This is our Judgement.”