MTN Nigeria, an offshore South African company in joint ownership with some influential Nigerians capitalising on the fluidity of Nigerian laws to foreign businesses, has again been caught in the surreptious under-hand dealing and short-changing of the Federal Government.
Consequently, the Federal Government has asked MTN Nigeria to pay fresh $2 billion in tax arrears on imported equipment and payments to suppliers.
The Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN, in a letter to the company, said the import duties, Value Added Tax and withholding taxes on foreign imports/payments dated back to 10 years.
Recall that one week ago, Central Bank of Nigeria (CBN) ordered Citibank, Diamond Bank, Stanbic IBTC Nigeria and Standard Chartered Bank to refund N5.87 billion for allegedly issuing irregular Certificates of Capital Importation (CCIs) on behalf of some offshore investors of MTN Nigeria Communications Limited into the coffers of the apex bank.
“The attorney general notified MTN that his office made a high-level calculation that MTN Nigeria should have paid approximately $2bn in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years,” a statement signed by the Public Relations Manager, MTN Nigeria Limited, Funso Aina, stated on Tuesday.
The fresh demand is coming barely one week after the Central Bank of Nigeria asked the Africa’s telecoms giant and its bankers to repatriate $8.1bn it allegedly paid as dividends between 2007 and 2015.
However, MTN Nigeria said an initial assessment of the period indicated that total payments made to the tax authorities with regard to the foreign imports and payments amounted to $700m, adding that it had fully settled all taxes on the imports under scrutiny.
The company said after it had presented its documents to the Nigerian authorities, the government insisted on recovering the $2 billion from it.
It expressed regret that despite its engagement with the Nigerian authorities on Certificates of Capital Importation and the multiple tax assessments conducted by the Federal Inland Revenue Service that were satisfactorily concluded, the matters were being revisited.
Speaking on the attorney general’s demand notice for historical tax obligations, MTN’s Corporate Relations Executive, Tobe Okigbo, was quoted as saying, “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.”
Providing further clarification on the accusation of illegal repatriation of funds, Okigbo said all dividend repatriation by MTN Nigeria to its shareholders was done on the basis of its equity capital and dividend was declared with valid CCIs, adding that no preference dividend was declared.
The Head of Asset Recovery in the office of the attorney general, Ladidi Mohammed, told Reuters in a telephone interview that an investigation was then carried out by the apex bank.
The latest demands come two years after MTN, Africa’s biggest telecoms company, agreed to pay more than $1billion to end a dispute with Nigeria over unregistered Subscriber Identification Module cards and agreed to list on its stock exchange as part of the settlement.
The Chief Executive Officer, MTN Group Limited, Rob Shuter, said the company was committed to Nigeria even as the continent’s largest wireless carrier considers how to respond to an order to return the repatriated funds.
“We have a proud history of being a major partner to the people of Nigeria and notwithstanding our current difficulties,” Shuter said in an emailed response to Bloomberg questions.
The CEO, a former Vodafone Group Plc executive, was appointed partly in response to the previous Nigerian crisis, which claimed the job of his predecessor. Since taking over in March 2017, he has started a review of the South African company’s 22 markets across Africa and the Middle East, and agreed the sale of its Cyprus unit, which it concluded for 4.5 billion rand ($301m) in cash, it said on Tuesday. He, however, said with more than a quarter of MTN’s total subscribers, Nigeria could not be easily abandoned.
