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The Lagos State Division of the Tax Appeal Tribunal has ruled that MTN Nigeria Communications must pay a fine of $72,551,059 in tax default to the Federal Inland Revenue Service (FIRS) for the years 2007 to 2017. However, the tribunal absolved the telecommunications company from paying the sum of $21,039,807 as penalties and interest on the principal amount.
The five-man panel, led by Professor A.B. Hamed, delivered this verdict in an appeal numbered TAT/LZ/VAT/075, filed by MTN against FIRS’s request for payment of the tax default. Other members of the panel included P.A. Olayemi, Babatunde Sobamowo, Samuel N. Ohwerhoye, and Terzungwe Gbakighir.
The issue began in 2018 when the Office of the Attorney General of the Federation (OAGF) issued a report covering MTN’s Forms A and M transactions for the accounting years 2007 to 2017. A revised report in 2018 adjusted the alleged outstanding import duty and VAT to the tune of N242.2 billion for Form M-visible transactions and $1.284 billion for Form A invisible transactions. In 2020, the FIRS received a report from the OAGF regarding MTN’s alleged VAT and WHT liability, which led to a tax dispute.
After a series of meetings between MTN, its tax consultant KPMG Advisory Services, and FIRS to resolve the dispute, FIRS issued a VAT assessment of $93,590,366 to MTN in July 2021. This assessment included $72,551,059 as the principal liability and $21,039,807 for penalties and interest on the principal sum. MTN objected to this assessment, which led to FIRS’s revised assessment of $135,697,755 in April 2022.
The tribunal considered five key issues for determination. It ruled in favor of FIRS on issues one to four, concluding that MTN should settle the assessed liabilities accordingly. However, issue five, concerning penalty and interest, was resolved in favor of MTN and set aside by the tribunal. This marks the final judgment of the tribunal in this matter.
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