Telecom giants, MTN Nigeria has asked a tax tribunal to rule on corporate tax payment claim by Federal Inland Revenue Service (FIRS) on the N330 billion fine paid to NCC for SIM infraction.
This development was due to the technical disagreement between FIRS and MTN Nigeria over the tax deductions in the N330 billion fine payment NCC imposed on MTN in 2015.
Babatunde Fowler, Chairman of FIRS, in an interview with Premium Times said that the FIRS position is that MTN cannot remove tax from fines imposed on it by the federal government.
“The alternative is for MTN to go to court and let the court (maybe Supreme Court) say the FIRS was wrong, and that such fines or penalties are tax-deductible,”Mr Tunde Fowler, Executive Chairman of Nigeria’s Federal Inland Revenue Service (FIRS)
MTN Nigeria maintains stance on the tax deductions
MTN’s corporate affairs Manager, Onome Okwah in a statement acknowledged the disagreement with FIRS.
“We acknowledge that there is a technical disagreement between MTN and the Federal Inland Revenue Service (FIRS) as to how the fine should be treated for tax purposes.Onome Okwah, MTN’s corporate affairs Manager
Okwah, however, said the company remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal on the matter.
“MTN remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal. The company is committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria,”Onome Okwah, MTN’s corporate affairs Manager
MTN vs Nigerian regulatory bodies
MTN Nigeria has had a history of infractions with regulatory bodies in the country due to alleged breaches. In 2015, NCC issued MTN a hefty fine of $5.2 billion over failure to deactivate 5 million unregistered sim cards.
After an extended court battle with the NCC, MTN later opted for an out of court settlement during which an agreement was made to reduce the fine to N330 billion on the terms that MTN gets listed on the NSE.
Similarly, in May 2018, the office of the Attorney General of Nigeria claimed MTN owed $2 billion in unpaid taxes and penalties. The allegation sparked another legal battle which the telecom giant is still battling in court, with the case adjourned to October 2019.
The Central bank also has a history with MTN. In December 2018, MTN and CBN resolved their dispute for the illegal remittances on preference shares issued in 2008 with the payment of N19.2 billion as the notional reversal amount.
Recently, the FIRS and MTN developed a technical disagreement over the tax deduction on the recently completed NCC fine they paid. This time MTN has approached the tax tribunal to protest the FIRS claims.
The implications of a tax tribunal
MTN’s request for a judicial review of the tax claim by FIRS means that a tax tribunal will sit on the issue to resolve the disagreement. Speaking on the request, an MTN Nigeria spokesman said that they believe the fine should be treated as operation cost.
“We believe that the fine should be treated as part of the cost of running the business but the FIRS thinks otherwise,”MTN Nigeria’s spokesman
MTN waits on the ruling of the tax tribunal, but if the tribunal rules otherwise MTN may have to pay all the tax claims by FIRS.
The spokesman, however, insists that all the money requested by FIRS had been paid before going to the tribunal.
“We’ve paid everything to the FIRS then we went to the tribunal and because the case is with the tax tribunal the government can’t access the money.”MTN Nigeria’s spokesman
The FIRS is yet to provide further clarifications on their disagreement with MTN. The decision of the tax tribunal whichever way it swings could set a precedent as to how penalties issued by federal agencies are treated by companies registered in Nigeria.
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