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Tricky tax tapestry for MTN Group in Nigeria

By , Africa editor
Nigeria , 26 Oct 2023
MTN Group president and CEO Ralph Mupita.
MTN Group president and CEO Ralph Mupita.

MTN Group, Africa's largest telecom provider, is once again mired in a tax issue in Nigeria, its largest market, after being ordered to pay $72.6 million in back taxes.

The order was issued this week by Nigeria's Tax Appeal Tribunal in Lagos, and it states that the amount is due for unpaid taxes, from the period between 2007 and 2017.

A five-person tribunal issued the verdict in response to an appeal, filed by MTN Nigeria, against the Federal Inland Revenue Service’s (FIRS) request for payment of the unpaid taxes.

MTN Group, located in South Africa, has had long-running battles with Nigeria tax authorities over the years.

With the latest case, MTN Group is currently considering its alternatives and is likely to provide an update to the markets tomorrow.

It said: "We are reviewing the decision of the tribunal and will comment on this when we release our Q3 23 trading statement on 27 October 2023.”

The case emanates from a complaint filed in May 2018 by the Attorney General, which reviewed MTN's transactions from 2007 to 2017.

Nigeria’s FIRS issued a VAT assessment of $93.5 million to MTN Nigeria in July 2021, which included $72.5 million in principal liability and $21million in penalties and interest on the principal sum.

MTN Nigeria objected to this assessment, leading to a further review by FIRS. In a notice of assessment, dated April 14, 2022, FIRS issued a revised assessment to MTN.

MTN Nigeria then lodged an objection to the revised assessment, which was refused by FIRS in a letter dated June 16, 2022, and the matter ended up at Tax Appeal Tribunal.

Now, the Tax Appeal Tribunal, after considering the matter, ruled in favour of FIRS and ordered MTN to settle the assessed tax liabilities.

Earlier this year, PeterTakaendesa, head of equities at Mergence Investment Managers, spoke to ITWeb Africa about the tax quandary that telcos face across Africa.

"Many African governments are increasingly coming under pressure from limited revenue growth compared to the growth of their actual spending budgets, thereby putting pressure on their currencies as deficits grow and investors demand a higher margin of safety when lending money to those countries," he said.

"It is therefore becoming difficult to fix these problems by cutting government spending in such an environment, so some governments are resorting to unusual approaches of trying to back-date tax calculation methods or interpretation of laws.”

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