Back in 2015, the Nigerian business of South African telecommunications giant, MTN, was rocked to its very foundations when it was slapped with a staggering USD 5.2 Bn fine for flouting the orders of the Nigerian government by failing to deactivate as many as 5 million unregistered SIM cards.
What followed was a long period of negotiation and mediation, after which the fine was chopped down to USD 1 Bn (NGN 330 Bn), but on the condition that MTN lists on the Nigerian Stock Exchange (NSE).
So, when the telco completed the payment of the fine earlier this year and listed on the NSE, everyone assumed that the telco’s tango with the Nigerian government has finally been put to bed. But it appears the debt payment and listing on the NSE was no more than a ceasefire as hostilities seem to have resumed. And once again, most of it is about who has to pay what to whom.
Word on the street is that MTN Nigeria is facing a fresh tax dispute with Nigeria’s tax agency and this time, the telco is being accused of deducting tax from the NGN 330 Bn fine imposed by the Nigerian Communications Commission (NCC) in 2015.
The Federal Inland Revenue Service (FIRS) is faulting MTN Nigeria over the deductions of taxes from its 2015 record fine. This accusation was made by FIRS Chairman, Babatunde Fowler, who is convinced that fines and penalties for regulatory infractions are revenues paid to the Federal Government and should not be subjected to any tax deduction.
While speaking with Premium Times, the FIRS boss called out MTN Nigeria for considering fine and penalty as tax-deductible, while stating that the position of Nigeria’s tax agency is that MTN cannot crop off tax from the fine 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,” Fowler was quoted as saying.
And it does look like MTN has taken him up on that and both parties will have their day in court. MTN Nigeria, in a corporate filing on Monday, August 4, acknowledged that there is a technical disagreement between it and the FIRS as to how the fine should be treated for tax purposes.
MTN Nigeria’s secretary, Uto Ukpanah, offered that the company remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal on the matter. For good measure, the secretary also claimed that the company has paid more than NGN 1.7 Tn in taxes, levies, and fines to the Nigerian government since 2001.
From all indications, the telco has taken the disagreement to the Tax Tribunal set up by FIRS Chairman and Minister of Finance, and it is awaiting a ruling on the latest dispute.
But even if both parties reach a compromise on this front, it will just be one less thing for MTN to worry about because the telco isn’t entirely off the hook. The company is still embroiled in yet another tax dispute with the office of Nigeria’s attorney-general over billions in taxes related to the importation of foreign equipment and payments to foreign suppliers since 2008. The matter is still in court.
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