MTN fumes as Nigeria demands for $2 Billion ‘unpaid’ taxes

MTN Nigeria has been asked to pay $2billion for import duties, Value Added Tax (VAT) and withholding taxes on foreign imports/payments.



But the telco has rejected the demand, which is from the Office of the Attorney-General of the Federation.

In a statement, the company said it had been lauded by the various tax authorities for its faithfulness on tax remittance to the Federal Government.

It has, however, notified its stakeholders about the new demand from the Federal Government.

The statement, which was endorsed by its Corporate Relations Executive, Tobe Okigbo, said: “MTN equally strenuously rejected the findings of the Attorney General’s investigation and believes it has fully settled all amounts owing under the taxes in question.”

“Following the receipt of the letter from the CBN on foreign exchange repatriation, MTN Nigeria has provided an update on the company’s position on the issue. The company has also notified the market and all stakeholders that it has received a notice from the Attorney General of Nigeria that he intends to recover up to $ 2 billion of tax relating to, inter alia, import duties, VAT and withholding taxes on foreign imports/payments.

“It is both regrettable and disconcerting that despite the historic engagements with the Nigerian authorities by MTN Nigeria, the Senate investigation into the CCI (Certificate of Capital Importations) 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.”

Reacting to the Attorney-General’s “demand notice” for historical tax obligations, Mr Okigbo said: “MTN has conducted a detailed review of these claims, and provided evidence of tax remittance to the Attorney General’s office. The Attorney General’s notice indicates that he is rejecting this evidence. We believe that all taxes due to the Nigerian government have been paid and these allegations have not been raised by any of the revenue generating agencies that MTN engages with regularly, and from whom MTN has received numerous awards for compliance.”

He, however, said the telco will continue to engage with the authorities on all these matters and “we remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position”.

Giving further update on the CBN letter on foreign exchange, the telco said the MTN Group and the original shareholders injected $402, 625,419 into MTN Nigeria between 2001 and 2006 in the form of loans and equity. These initial inflows were the basis for the issuance of various legacy CCIs obtained from Authorised Dealers in accordance with regulations. The inflow of capital has been confirmed by the CBN.

“We were notified by the office of the AG last week that they have not accepted the documentation presented and they have given notice of an intention to recover the $2.0billion from MTN Nigeria. Based on the detailed review performed MTN Nigeria believes it has fully settled all amounts owing under the taxes in question,” the telco said.