Telecoms giant MTN faults attorney-general's claim that it owes $2bn saying Malami is out of order

TELECOMMUNICATIONS giant the MTN Group has questioned the recent request sent to it by Nigeria's attorney-general Abubakar Malami insisting that the company pays a sum of $2m to the government as outstanding corporation tax.


Nigeria is one of the most lucrative telecommunications markets in the world and companies like MTN make huge profits thanks to the rise in mobile phone usage and increasing Internet penetration.  Last September, Mr Malami wrote to MTN reminding it that it owed the government $2bn in taxes, warning that if the sum was not paid, ministers would be forced to drag the company to court.


Disputing liability, however, MTN's chief executive Rob Shuter accused Mr Malami of playing games over the matter. Speaking during a conference call where MTN’s 2018 annual results were presented to executives and stakeholders, Mr Shuter insisting that the company had fully settled all outstanding taxes owed the Nigerian government.


In his letter, Mr Malami had broken the cash down into several categories including a 10-year period for import duties, value added tax and withholding taxes on foreign imports/payments. However, Mr Shuter described the legal process as odd, adding that the attorney-general had no right to collect tax on behalf of the federal government.


Mr Shuter said: “I think if you look at our history for complicated tax disputes they can take years because you end up going through this tribunal and that tribunal. Now, of course what’s odd about the Nigeria situation is it’s not the commissioner for inland revenue that we have the dispute with, i8t’s the attorney-general, who is really not mandated to collect tax.


“So, the legal process is basically saying you’re playing a game that you’re not meant to be playing and when we talk to the tax authorities they have no particular quarrel with where we are with our various assessments. So, either we get the thing chucked out early on and the issue is finished, or it is just one of these lingering things that rolls around in the system for a while and personally I don’t know which way it’s going to play out.


“I’m just absolutely adamant that we’re a responsible company. We have paid the taxes we had to pay and the tax authorities themselves aren’t saying that we owe them anything, so I think we’ve just got to stare this one down.”


MTN's chief financial officer, Ralph Mupita, said the company has thoroughly double-checked its books without finding any remote exposure. It now looks like the matter will eventually be determined in court as the hearing of the suit first scheduled for November 8 last year has been adjourned to March 26.


Mr Mupita said: “The audit committees of both Nigeria and the group, as you can well imagine, have gone through this very thoroughly in terms of all our tax exposures and it’s the second time we’ve looked at this. We looked at it in the half year when it was then a tax assessment before the letters came in August and we still believe there isn’t even a remote exposure that we would put in contingent liabilities.


“In the course of having any tax disputes with the authorities these things can take years. So, if this thing rolls on it’s no different from a transfer pricing matter you may have a dispute with an authority in country x, y, z.”