MTN says Nigeria's attorney general exceeded powers in US$2 billion tax bill

MTN says Nigeria's attorney general exceeded powers in US$2 billion tax bill

Nigeria's attorney general exceeded his powers in demanding US$2 billion in taxes and charges from MTN Group, Africa's biggest telecoms firm said in papers filed with Nigeria's High Court and reviewed by Reuters.

The logo of MTN is pictured in Abuja
The logo of MTN is pictured in Abuja, Nigeria September 11, 2018. REUTERS/Afolabi Sotunde

LAGOS: Nigeria's attorney general exceeded his powers in demanding US$2 billion in taxes and charges from MTN Group, Africa's biggest telecoms firm said in papers filed with Nigeria's High Court and reviewed by Reuters.

The papers, filed on Monday in a move by the Nigerian arm of the South African firm aimed at protecting its assets, also showed MTN was seeking 3 billion naira (US$10 million) from the West African country in court and legal expenses.

Earlier this month, the Nigerian government handed Africa's biggest telecoms company a US$2 billion tax bill days after the central bank, in a separate move, ordered MTN's Lagos unit to hand over US$8.1 billion that it said was illegally sent abroad.

Nigeria, which accounts for a third of MTN's annual core profit, is MTN's biggest market. Some analysts see politics as a factor in the pressure on MTN as Nigerian President Muhammadu Buhari, who took office in 2015 on promises to push through tougher regulation, is seeking re-election in 2019.

"The attorney-general of the federation (of Nigeria) acted illegally, unconstitutionally, and in excess of his powers" by implementing charges in a "self-assessment exercise" that related to customs, the inland revenue and import duties, the court documents state.

The attorney general did not respond to telephone calls and a text message requesting comment. His spokesman also did not respond to calls and a text message.

The documents seen by Reuters include a writ of summons, dated Sept. 10, ordering the attorney general or his representative to make an appearance at the high court in Lagos within 30 days.

It was not clear whether the attorney general had filed a statement of defence.

The attorney general has previously said MTN Nigeria should have paid approximately US$2 billion in taxes relating to imports of foreign equipment and payments to foreign suppliers.

The documents submitted by MTN, some 70 pages of which were seen by Reuters in which the attorney general is referred to as AGF and MTN Nigeria as MTNN, also refer to the allegation that MTN illegally sent US$8.1 billion abroad.

The crux of that allegation, made by the central bank, is that MTN used improperly issued certificates to convert shareholder loans in its Nigerian unit to preference shares in 2007. As a result, US$8.1 billion in dividends paid by MTN Nigeria to its parent between 2007 and 2015 should be returned.

MTN has denied the allegations.

It is not the first time the telecoms firm has been accused of infractions in its largest market.

Its latest troubles come around two years after it agreed to pay more than US$1 billion to settle a dispute over unregistered SIM cards in Nigeria, whose finances have been hit by a weak economy and volatile global oil prices.

The chief executive of MTN, which has expanded in more than 20 frontier markets including war-ravaged Syria and Afghanistan, on Monday told reporters in South Africa he was confident that the dispute would be resolved.

(US$1 = 304.2500 naira)

(Additional reporting by Chijioke Ohuocha and Camillus Eboh in Abuja, and Paul Carsten in Kano; Writing by Alexis Akwagyiram; Editing by Mark Potter/David Evans)

Source: Reuters

Bookmark