Home Finance Lagos tax tribunal orders MTN to pay $72.5m to FIRS

Lagos tax tribunal orders MTN to pay $72.5m to FIRS


The Tax Appeal Tribunal in Lagos state has ordered MTN Nigeria Communications to pay $72, 551, 059, in tax default from 2007 to 2017 to the Federal Inland Revenue Services.

However, the telecommunication firm was absolved from paying $21,039,807, as penalties and interest on the principal sum.

The order was given on Friday by a five-man panel led by Professor A. B. Hamed in an appeal numbered TAT/LZ/VAT/075 and filed by MTN against the request by the FIRS to pay the default. Other members of the panel were P. A. Olayemi, Babatunde Sobamowo, Samuel N. Ohwerhoye and Terzungwe Gbakighir.

Before the appeal, on May 10, 2018, the Office of the Attorney General of the Federation issued a report of its investigation into the MTN’s Forms A and M transaction, covering the 2007 to 2017 accounting years.

But, in a revised report dated August 20, 2018, the OAGF 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).

FIRS conducted a review of MTN’s tax and accounting records after it got the OAGF’s report and upheld the alleged tax liability.

However, 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.

Thereafter, in July 2021, the FIRS issued a VAT assessment of $93, 590, 366m to the MTN. This assessment comprised the sum of $72, 551, 059m, as the principal liability and $21,039,807m, for penalties and interest on the principal sum (first assessment).

MTN objected to the first assessment whereupon the FIRS further reviewed the assessment. Accordingly, by the Notice of Assessment dated April 14, 2022, the Respondent issued a revised assessment for US $135,697,755m to MTN as a revised assessment.

Also MTN by a letter of notice of objection dated May 13, 2022, objected to the FIRS’s revised assessment, and FIRS by a letter dated June 16, with ref. no. FIRS/TID/LOS/2020/0213/01, notified the MTN of its refusal to amend the revised assessment.

Dissatisfied with the FIRS’s amended revised assessment, MTN filed the Appeal before the Tax Appeal Tribunal.

Upon reviewing all the processes filed by the parties, the tribunal distilled five issues for determination, which were; “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.”

The tribunal, after taking arguments on the parties, resolved issues one to four in favour of the FIRS, and issue five was resolved in favour of MTN.

The tribunal 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 in relation to penalty and interest is resolved in favour of the Appellant and is therefore set aside by this Honourable Tribunal. This is our Judgement.”



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