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.
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 interview recently, Tunde Fowler, FIRS boss, disclosed that despite that MTN has since paid the fine to the Federal Government, the matter was not yet resolved.
According to 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,” Fowler said 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,” Fowler said.
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).