The Lagos State Division of the Tax Appeal Tribunal has ordered MTN Nigeria Communications to pay $72,551,059 in back taxes to the Federal Inland Revenue Services for the period from 2007 to 2017.
The verdict, delivered by a five-man panel led by Professor A. B. Hamed, concluded a lengthy legal battle.
The tribunal’s decision was not without complexity. While it held MTN liable for the principal tax amount, it absolved the telecommunications giant from paying $21,039,807 in penalties and interest on the principal sum.
The ruling stemmed from an appeal filed by MTN against the FIRS’s request to settle the outstanding tax debt, which had its origins in an investigation by the Office of the Attorney General of the Federation in May 2018.
The dispute involved recalculations and revised assessments, leading to a revised tax liability figure of $135,697,755.
This complex case revolved around several key questions, including the taxability of software licensing, satellite bandwidth leasing, the statute of limitations for tax investigations, VAT on offshore training, and the calculation of interest and penalties.
The tribunal ultimately resolved the first four issues in favor of the FIRS, affirming MTN’s obligation to pay the assessed liabilities.
However, it ruled in favor of MTN regarding the calculation of penalties and interest, setting aside those charges.
The decision highlights the importance of clarity and consistency in tax regulations and the need for companies and tax authorities to engage in a constructive dialogue to resolve complex tax matters.