MTN Nigeria has said it took the Federal Inland Revenue Service before the tax tribunal to seek clarification over its right to deduct tax from the regulatory fine imposed by the Nigerian Communications Commission (NCC) in 2015.
In its reaction to enquiries Monday last week, the tele-mobile firm said the decision to approach the tribunal followed a “technical disagreement” with the tax agency.
The MTN said the dispute was rooted on how the fine should be treated for tax purposes by the FIRS.
In October 2015, the NCC imposed a N1.04 trillion (about $5.2 billion) fine on MTN for failure to disconnect 5.1 million unregistered subscribers from its network.
However, following the intervention of the presidency in the matter, the fine was reduced to N330 billion.
MTN completed the payment on May 31, 2019.
But, in an exclusive interview with PREMIUM TIMES, the FIRS Chairman, Tunde Fowler, disclosed that despite that MTN has since paid the fine to the Federal Government, the matter was not yet resolved.
According to Mr Fowler, the unresolved issue with FIRS has to do with MTN’s dispute whether it has a right to deduct tax from the fine or not.
“The MTN took a position that the fine or penalty should be tax-deductible. (But), the FIRS said that does not make sense.
“One cannot be given a penalty or fine, which is a punitive measure, and the company is saying it is tax-deductible so that it will get a tax credit on that,” Mr Fowler disclose in his office in Abuja.
He said the FIRS told the MTN management such deductions cannot be made, “as fines and penalties for regulatory infractions are revenues to the federal government and are not subject to any tax deduction.”
The FIRS Chairman said although the MTN made the payment in protest, the position of the revenue agency on the fine and penalty will not change until a court of competent jurisdiction gives its final ruling on it.
“Initially they (MTN) made the payment on account. The FIRS said, no, it is not on account, but it is tax due to government,” he said.
“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,” Mr Fowler said.
MTN reports to NSE
The MTN did not respond to PREMIUM TIMES enquiries on the matter. Its spokesperson requested time to cross-check the information and revert. He did not.
But, on Friday, the telecoms firms made a regulatory filing with the Nigerian Stock Exchange titled: “Announcement regarding status of taxes relating to the 2015 Fine.”
The filing on Tuesday, dated August 2, was signed by its Company Secretary, Uto Ukpanah, read:
“Our attention has been drawn to media reports regarding the status of taxes relating to the 2015 fine imposed on MTN Nigeria Communications Plc (MTN).
“We acknowledge that there is a technical disagreement between MTN and the Federal Inland Revenue Service (FIRS) as to how the fine should be treated for tax purposes.
“However, while the monies have been paid to FIRS, we have taken the disagreement to the Tax Tribunal set up by FIRS Chairman and Minister of Finance, and are awaiting a decision.
“MTN remains fully compliant with Nigerian tax laws and will abide by the findings of the tribunal. The company is committed to meeting its fiscal responsibilities and contributing to the social and economic development of Nigeria.
“Since incorporation in 2001, MTN has invested more than NGN2 trillion into the Nigerian economy and has paid more than NGN 1.7 trillion in taxes, levies and other regulatory fees.”
Credit: Premium