MTN in deeper trouble over $2bn tax default

Embattled telecoms giant, MTN Group Limited, is deeper in troubled waters as the Federal Government of Nigeria moves to recover back taxes to the tune of $2 billion.

National Daily gathered that the Attorney General of the Federation, Abubakar Malami, while conducting an investigation into corporates’ tax compliance in Nigeria, discovered that MTN owes Nigeria the sum of $2bn in back taxes.

The taxes, it was gathered, span over a ten-year period and are related to the importation of foreign equipment into the country as well as payments to the suppliers of the said equipment.

According to a statement made available to National Daily by MTN, it said it carried out the internal assessment as directed by the Attorney General, and in August 2018 submitted a report showing that the “total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are $700 million.”

But the Attorney General rejected the report and last week notified MTN Nigeria that it owes $2 billion in back taxes.

Now, MTN believes this latest controversy is uncalled for, as it has supposedly settled all of its tax obligations. The company also believes that “it is both regrettable and disconcerting” that it is facing these issues despite previous efforts made in the past to resolve them.

Recall that MTN has been embroiled in many controversies recently. Barely one week ago, the Central Bank of Nigeria (CBN) ordered it to refund the sum of $8.1 billion; being funds that were illegally remitting to South Africa over time.

In line with the development, Nigeria’s apex bank also imposed a fine of ₦5.86 billion on the four banks which were accused of facilitating the illegality; including Standard Chartered Bank, Stanbic IBTC, Diamond Bank Plc and Citibank.

The controversy caused MTN Group’s shares to plunge to all-time lows in over five years. It also cast doubt over the likelihood of MTN’s planned Nigerian IPO ever taking place.

At the moment, MTN Group is worried as uncertainty hangs over its operation in Nigeria. Asides the doubt that has been cast over MTN Nigeria’s IPO, the telco is also reportedly worried the Nigerian Communications Commission (NCC) may reimpose the initial fine of $5 billion should the company fail to abide by its listing ultimatum of May 2019.

More so, Africa’s leading telco will struggle to refund the $8.1 billion which is about half of its market capitalisation.