Federal government has issued a tax demand note of $2 billion in tax arrears from MTN Group Ltd., less than a week after it was ordered to refund $8.1 billion in illegally repatriated funds. But MTN Nigeria in a sharp reaction has faulted the Attorney General of the Federation, AGF, on the $2billion tax debt which he alleged the telco owed the federal government, saying AGF’s calculations were wrong. MTN Nigeria said that the Attorney General had notified it that his office made a high-level calculation and arrived at approximately $2.0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years, which he said MTN Nigeria should have paid.
The company through its Public Relations Manager, Mr Funso Aina, also said that after the notice, the AGF allowed it the opportunity to do a self-assessment of the taxes in this regard that have been actually paid. Aina, said that “MTN Nigeria in compliance to the request, submitted a comprehensive documentation to the office of the AGF in August 2018 detailing initial assessment of the full period which indicates that total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are $700 million”.
He however, expressed shock that MTN was later notified by the office of the AG last week that they have not accepted the documentation presented and expressed intention to recover the $2.0bn from MTN Nigeria. Aina said that “Based on the detailed review performed, MTN Nigeria believes it has fully settled all amounts owing under the taxes in question” Although he never disclosed details, he said “there are valid reasons for the differences between the actual payments and the AG high-level assessment”.
MTN, has had several allegations against it in recent weeks including one from the Central bank of Nigeria, CBN on improper foreign exchange repatriation. Speaking on the CBN allegations, MTN Corporate Relations Executive Mr Tobe Okigbo said that MTN continues to strenuously deny the allegations and has provided further clarity on the company’s position. He said MTN equally strenuously rejects the findings of the Attorney General’s investigation and believes it has fully settled all amounts owing under the taxes in question. He said: “It is both regrettable and disconcerting that despite the historic engagements with the Nigerian authorities by MTN Nigeria, the senate investigation into the CCI matter, and the multiple tax assessments done by the Nigerian tax authorities over many years that were satisfactorily concluded, that these matters are being reopened.
“From the CBN’s own letter and subsequent statements, it is clear that there is no dispute that the capital captured in MTN’s books and for which CCIs were issued was imported into Nigeria, and this is acknowledged explicitly by the CBN. It is equally clear that Nigerian law provides for guaranteed unconditional transferability of funds through an Authorised dealer in freely convertible currency relating to dividends or profits attributable to the investment, payments and in respect of loan servicing where a foreign loan has been obtained.
“All dividend repatriation done by MTN Nigeria to its shareholders was done on the basis of its equity capital and all the historic dividends were declared against valid equity CCIs and in fact no preference dividends were declared and no interest in respect of these preference shares was paid. This means that it is incorrect to suggest that the conversion of a shareholder loan to preference shares has any relation to the repatriation of dividends. The two are simply not connected and we are trying to understand this position that the Central Bank has taken.” he added. He promised that MTN Nigeria will continue to engage with the relevant authorities on all these matters and will remain resolute that it has not committed any offences and will vigorously defend its position
The difference between the $2 billion tax bill and the $700 million paid by MTN is due to different interpretations of charges ranging from VAT and withholding tax to import duties by the Nigerian government, said a person familiar with MTN’s thinking on the matter. The government assumed a flat rate on withholding tax, didn’t account for certain VAT exemptions, calculated an average duty on imports, whereas rates vary, and didn’t account for goods and services garnered from local suppliers, said the person.
