Malami Hands-off Tax Dispute with MTN, Refers Case to FIRS, Customs

Abubakar Malami
Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN),
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Goddy Egene and Emma Okonji

After 17 months of tenaciously holding to allegations of back tax indebtedness against MTN Nigeria, the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, SAN, has now transferred the resolution of the dispute to the Federal Inland Revenue Service and the Nigerian Custom Service.

The AGF had in September 2018, accused MTN Nigeria of two separate revenue indebtedness to the tune of N242,244,452,215.97 and $1,283,610,357.86, an allegation the firm vehemently refuted and subsequently went to court to challenge.

Friday, MTN celebrated this latest step at resolving its legal woes with the Nigerian authorities in a press statement signed by its Company Secretary, Uto Ukpanah, saying the attorney general’s office had “withdrawn its letter of demand” for the back taxes, and that the company would consequently follow due court process to withdraw its legal action against the AGF and engage with the FIRS and Customs on the issues.

Traders and investors at the JSE Security Exchange in South Africa reacted positively to the news as MTN Group’s share price rose 5.3 per cent from R7,946.00 to R8,367.00.

The Special Assistant on Media and Public Relations to Malami, Dr. Umar Jibrilu Gwandu, said the Minister made the latest development on the dispute known in a letter dated 8th January, 2020 addressed to MTN Nigeria’s Counsel, Messrs Wole Olanipekun & Co.

The letter sent to MTN Nigeria by Malami reads in part: “Having carefully and painstakingly reviewed the correspondence reference and following due consultation with relevant statutory agencies, the Office of the Honourable Attorney-General of the Federation and Minister of Justice has decided to refer the matter under reference to Federal Inland Revenue Services and Nigeria Custom Services with a view to resolving contentious issues.
“You may wish to be informed and be guided for the time being, pending the outcome of the interrogation of the relevant statutory agencies.

“The Federal Inland Revenue and Nigerian Custom Services are the regulatory authorities vested with the powers of monitoring foreign exchange utilisation and assessment of taxes among others as canvassed and contended by the parties in their respective submissions. The development is in line with oversight functions of Customs and Excise Management Act and Federal Inland Revenue Service relating to monitoring foreign exchange utilisation and prevention of illegal trade, in case of customs, and assessment, collection and accounting for tax and other revenues accruing to the Federal Government, as it relates to Federal Inland Revenue Service.

“With this, the Attorney-General of the Federation and Minister of Justice demonstrates unflinching commitment to the rule of law where all statutory agencies will be allowed to independently work with a view to fulfilling their mandates and recourse to them in contentious cases, as regulatory agencies of government on issues that border on their statutory mandate.”

Expressing satisfaction at the development, MTN Nigeria CEO, Ferdi Moolman said: “We are very pleased with the decision of the AGF and we commend him for his wisdom. We maintain our dedication to building and maintaining cordial relationships with all regulatory authorities in Nigeria and remain fully committed to meeting our fiscal responsibilities and contributing to the social and economic development of Nigeria.”

MTN Nigeria has battled a string of financial claims from the Nigerian authorities and last May, it floated its shares on the stock exchange in the West African country.

Last year, the company settled a $1.5 billion fine levelled by the authorities for failing to disconnect unregistered subscribers.
In 2018, it agreed to pay a separate $53 million fine after being accused of illegally repatriating $8.13 billion to South Africa.

The disputes with MTN have rattled investor confidence in Africa’s most populous nation and tarnished diplomatic relations between continental powerhouses Nigeria and South Africa.

MTN, which began operation in Nigeria in 2001, is Nigeria’s largest operator with some 60 million subscribers.

Meanwhile, traders and investors at the JSE Securities Exchange, which is the primary listing exchange of MTN, reacted positively to the dispute resolution news as the shares rose 5.3 per cent from R7,946.00 to R8,367.00. The Nigerian stock market did not react to the development as the shares stagnated at N116.00 per share.

However, the stock has recorded a year-date appreciation of 10.5 per cent at the NSE, moving from N105.00 to N116.00. This implies that MTN shares have outperformed the NSE All-Share Index so far this year, giving the fact the NSE ASI has gained 9.5 per cent compared with MTN’s 10.5 per cent.