MTN Nigeria slapped with $72.6M tax fine

MTN Group's Nigerian subsidiary has been ordered to pay US$72.6 million for unpaid taxes and penalties by Nigeria's Tax Appeal Tribunal.

The tax dispute between the telco and the Federal Inland Revenue Services (FIRS) started when the Office of the Attorney General of the Federation (OAGF), initiated an investigation into MTN Nigeria's transactions dating back from 2007 to 2017.

The OAGF said the telco had an outstanding balance of $72.5 million in value-added taxes (VAT) with additional penalties and interest of $21 million.

However, that assessment was categorically rejected by MTN Nigeria leading to a revised assessment of $47.7 million in VAT and $87.9 million in additional penalties, again the telco rejected those assessments.

After more than a year of reviews, the tribunal has ruled in favor of the FIRS and ordered MTN to pay the initial VAT assessment of $72.6 million but has cancelled the $21 million penalty.

MTN Group said it is reviewing a $72.6 million tax penalty in Nigeria and will comment on it when it releases its newest trading statement on October 27, 2023. (Source: Image by wayhomestudio on Freepik).

The MTN Group didn't respond to emailed questions from Connecting Africa; however, the telco told Bloomberg that it was reviewing the tribunal's decision and will give a response on Friday, October 27, 2023, when it releases its trading statement.

Nigeria is MTN's biggest market by subscribers and revenue out of the 17 markets it operates in across Africa.

MTN's African tribulations

Nigeria is not the only country that MTN has been at odds with over tax matters.

In February this year, the Ghanaian government scrapped a hefty 8.2 billion cedi (US$672 million at the time) tax bill charged to MTN Ghana.

The withdrawal came after the Ghana Revenue Authority in January 2023, sent the mobile operator a claim for the period between 2014 and 2018.

Ghanaian authorities alleged that the telco had underdeclared its revenue by as much as 30%.

MTN Ghana strongly disputed the accuracy and basis of the assessment, including the methodology used in conducting the audit.

In Cameroon, the company had its accounts frozen in September 2022 due to a bizarre case that stems from a dispute between Cameroonian business mogul Ahmadou Baba Danpullo, who owns Bestinver Group, and South Africa's First National Bank (FNB) over a real estate loan.

To try and remedy that situation, MTN Group vowed to invest $225 million over three years towards Cameroon's digital economy.

Nigeria's mobile mix

It would be interesting to see how MTN Nigeria's response to the fine will impact its subscribers.

According to statistics from market research company Omdia, MTN was the leading mobile operator in Nigeria in the third quarter of 2023 with an estimated 78 million subscribers.

Follow Connecting Africa on our new X account @connect__africa to get the latest telecoms and tech news across Africa.

Glo Mobile Nigeria is the second-largest operator with 62.6 million users. Airtel Nigeria follows closely in third with 60.7 million, leaving 9Mobile with around 13.8 million subscribers, according to Omdia.

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*Top image source: MTN Group.

— Matshepo Sehloho, Associate Editor, Connecting Africa