MTN Nigeria has revealed details of its ongoing legal dispute with the Federal Inland Revenue Service (FIRS) and the reasons behind its challenge of the Tax Appeal Tribunal’s decision to pay $47.8 million to the revenue agency. In a statement titled ‘MTN’s Tax Matter: Unveiling the Issues,’ the telecom giant explains the five crucial issues it has submitted for determination by the Tax Appeal Tribunal.
The first issue revolves around whether the provision of software, licensing, and upgrades qualifies as a taxable supply of goods and services based on the pre-amendment VAT Act provisions. The second matter questions whether the provision/lease of bandwidth capacities through satellite transponders qualifies as a taxable supply of goods and services.
MTN also seeks clarification on whether the FIRS has the authority to conduct a tax investigation beyond the 5-year restriction in the absence of false or untrue documents or statements. Additionally, the company wants to determine whether offshore facilitators providing training outside Nigeria are liable to VAT in Nigeria. Lastly, MTN aims to ascertain if the FIRS erred in calculating and imposing interest and penalties on MTN’s alleged non-remittance of VAT liabilities, considering that these liabilities are not yet final and conclusive.
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The case originated in 2018 when the Attorney General of the Federation imposed $2 billion in back taxes on MTN Nigeria. This led to a legal action by MTN Nigeria against the AGF. Subsequently, in 2020, the AGF referred the matter to the FIRS and Nigeria Customs, withdrawing the $2 billion demand issued in 2018. The dispute eventually evolved into a $135.7 million claim, comprising a principal tax liability of $47.8 million and interest and penalties of $87.9 million.
The recent Tax Appeal Tribunal ruling appears to have mixed outcomes for both parties, with MTN absolved from paying $21,039,807 in penalties and interest on the principal sum, but the FIRS still pursuing the amount.
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