- MTN Nigeria is being ordered to pay R1.4 billion in allegedly unpaid VAT to the Nigerian revenue services.
- This comes after a series of investigations into MTN’s filings and transactions in the country by state arms, including the Office of the Attorney General.
- MTN Nigeria is MTN Group’s largest subscriber market and one of its most profitable divisions.
The most profitable telecom firm across Africa has once again earned the ire of the continent’s largest economy. A special tribunal in Nigeria has ordered the West African country’s arm of MTN to pay R1.4 billion in allegedly unpaid taxes.
After a series of investigations into MTN Nigeria’s tax filings and transactions by a number of Nigerian state arms, including the Office of the Attorney General of the Federation (OAGF) and the Federal Inland Revenue Services (FIRS), it is alleged that the telecom owes the country R1.4 billion in unpaid VAT for the period between 2007 and 2017.
These fines were brought to MTN first in 2021 by FIRS, as well as an additional R400 million in penalties for interests accrued and were rejected by the company. Seeking to squash the fines, MTN sought the Tax Appeal Tribunal of Nigeria for a review.
Now after more than a year, the Tribunal has ruled in favour of FIRS that MTN must indeed pay the R1.4 billion in back taxes. However, the Tribunal has written off the additional R400 million fine that was tacked on, according to Punch who were among the first to report on the decision.
MTN Nigeria says it is now busy reviewing the process and will make a final statement on Friday this week, as per Bloomberg. One of MTN Group’s most profitable and fastest-growing divisions, the Nigerian business raked in R11.6 billion before taxes in the first quarter of the year, exceeding even the group’s South African earnings by a wide margin. It also accounts for the telecom’s largest group of subscribers.
This is not the first time that the Nigerian government has raised an issue with MTN. In 2018, the country ordered MTN to pay ~R38 billion ($2 billion) over alleged unpaid taxes. The group then waged a two-year legal battle against the Federal Government after which the claim was eventually dropped in 2020.
In 2019, a separate issue saw MTN pay around $53 million to settle a claim raised by the Central Bank of Nigeria, which alleged that the telecom illegally repatriated $8.1 billion using improperly issued paperwork between 2007 and 2008.
In 2015, MTN Nigeria was slapped with a $5.2 billion fine from the Nigerian Communications Commission (NCC) for allegedly failing to disconnect millions of unregistered SIM cards.
More recently, the government of Ghana abandoned a $773 million back tax bill it claimed against MTN after it was disputed. In the Democratic Republic of Congo, MTN rival Vodacom is itself embroiled in a tax dispute which has led the local government to freeze its bank accounts and close Vodacom’s local offices.
Every year telecom firms make huge amounts of money leveraging Africa’s vast unconnected and unbanked youth, and African nations will seemingly continue to claim a piece of these revenues.
Telecoms and their leaders, like MTN’s Ralph Mupita and Vodacom’s Shameel Joosub, are actively seeking tax breaks from the countries in which they operate, according to an agreement signed in Rwanda last week.