Still engrossed in the controversial
illegal repatriation of $8.1 billion, MTN Group has been slapped with a
$2 billion tax bill, compounding the woes of the leading wireless
company.
illegal repatriation of $8.1 billion, MTN Group has been slapped with a
$2 billion tax bill, compounding the woes of the leading wireless
company.
The company made known the tax bill and in a long statement rejected the Attorney General’s plan to recover the taxes.
The Nigerian government said the taxes
are accumulated from import duties, VAT and withholding taxes on foreign
imports/payments.
are accumulated from import duties, VAT and withholding taxes on foreign
imports/payments.
The company denied the tax demands and
also shed some light on the earlier bill of $8.1 billion from the
Central Bank of Nigeria (CBN)
also shed some light on the earlier bill of $8.1 billion from the
Central Bank of Nigeria (CBN)
The MTN Corporate Relations Executive, Mr
Tobe Okigbo in a statement said that MTN believes that it has fully
settled all amounts owed under the taxes in question.
Tobe Okigbo in a statement said that MTN believes that it has fully
settled all amounts owed under the taxes in question.
“Following the receipt of the letter from
the Central Bank of Nigeria on foreign exchange repatriation, MTN
Nigeria has provided an update on the company’s position on the issue.
the Central Bank of Nigeria on foreign exchange repatriation, MTN
Nigeria has provided an update on the company’s position on the issue.
“The company has also notified the
market, and all stakeholders that it has received a notice from the
Attorney General of Nigeria that he intends to recover up to US$ 2
billion of tax relating to, inter alia, import duties, VAT
and withholding taxes on foreign imports/payments.
market, and all stakeholders that it has received a notice from the
Attorney General of Nigeria that he intends to recover up to US$ 2
billion of tax relating to, inter alia, import duties, VAT
and withholding taxes on foreign imports/payments.
“MTN continues to strenuously deny the
allegations being made by the Central Bank of Nigeria and has equally
strenuously rejected the findings of the Attorney General’s
investigation and believes it has fully settled all amounts
owing under the taxes in question.
allegations being made by the Central Bank of Nigeria and has equally
strenuously rejected the findings of the Attorney General’s
investigation and believes it has fully settled all amounts
owing under the taxes in question.
“It is both regrettable and disconcerting
that despite the historic engagements with the Nigerian authorities by
MTN Nigeria, the senate investigation into the CCI matter, and the
multiple tax assessments done by the Nigerian
tax authorities over many years that were satisfactorily concluded,
that these matters are being reopened,” he said.
that despite the historic engagements with the Nigerian authorities by
MTN Nigeria, the senate investigation into the CCI matter, and the
multiple tax assessments done by the Nigerian
tax authorities over many years that were satisfactorily concluded,
that these matters are being reopened,” he said.
Okigbo said that from the CBN’s letter
and subsequent statements, it was clear that there was no dispute that
the capital captured in MTN’s books and for which CCIs were issued was
imported into Nigeria, and acknowledged explicitly
by the CBN.
and subsequent statements, it was clear that there was no dispute that
the capital captured in MTN’s books and for which CCIs were issued was
imported into Nigeria, and acknowledged explicitly
by the CBN.
He added that it was equally clear that
Nigerian law provides for guaranteed unconditional transferability of
funds through an Authorised dealer in freely convertible currency
relating to dividends or profits attributable to the
investment, payments and in respect of loan servicing where a foreign
loan has been obtained.”
Nigerian law provides for guaranteed unconditional transferability of
funds through an Authorised dealer in freely convertible currency
relating to dividends or profits attributable to the
investment, payments and in respect of loan servicing where a foreign
loan has been obtained.”
According to him, all dividend
repatriation done by MTN Nigeria to its shareholders was done on the
basis of its equity capital and all the historic dividends were declared
against valid equity CCIs.
repatriation done by MTN Nigeria to its shareholders was done on the
basis of its equity capital and all the historic dividends were declared
against valid equity CCIs.
“In fact no preference dividends were declared and no interest in respect of these preference shares was paid.
“This means that it is incorrect to
suggest that the conversion of a shareholder loan to preference shares
has any relation to the repatriation of dividends. The two are simply
not connected and we are trying to understand this
position that the Central Bank has taken,” he said.
suggest that the conversion of a shareholder loan to preference shares
has any relation to the repatriation of dividends. The two are simply
not connected and we are trying to understand this
position that the Central Bank has taken,” he said.
“On the Attorney General’s ‘demand
notice’ for historical tax obligations, MTN has conducted a detailed
review of these claims, and provided evidence of tax remittance to the
Attorney General’s office.
notice’ for historical tax obligations, MTN has conducted a detailed
review of these claims, and provided evidence of tax remittance to the
Attorney General’s office.
“The Attorney General’s notice indicates
that he is rejecting this evidence. We believe that all taxes due to the
Nigerian government have been paid and these allegations have not been
raised by any of the revenue generating agencies
that MTN engages with regularly, and from whom MTN has received
numerous awards for compliance,” Okigbo said.
that he is rejecting this evidence. We believe that all taxes due to the
Nigerian government have been paid and these allegations have not been
raised by any of the revenue generating agencies
that MTN engages with regularly, and from whom MTN has received
numerous awards for compliance,” Okigbo said.
He said that MTN Nigeria would continue
to engage with the relevant authorities on all these matters and would
remain resolute that MTN Nigeria had not committed any offences and
would vigorously defend its position.
to engage with the relevant authorities on all these matters and would
remain resolute that MTN Nigeria had not committed any offences and
would vigorously defend its position.
He said that as regards update on CBN’s
letter on foreign exchange, MTN Group and the original shareholders had
injected a total of $402, 625,419 into MTN Nigeria between 2001 and 2006
in the form of loans and equity.
letter on foreign exchange, MTN Group and the original shareholders had
injected a total of $402, 625,419 into MTN Nigeria between 2001 and 2006
in the form of loans and equity.
He said that these initial inflows were
the basis for the issuance of various legacy CCIs obtained from
Authorized Dealers in accordance with regulations, of which the inflow
of capital had been confirmed by the CBN.
the basis for the issuance of various legacy CCIs obtained from
Authorized Dealers in accordance with regulations, of which the inflow
of capital had been confirmed by the CBN.
He added that the CCI process was
essentially in place both for the protection of investors as well as to
provide the CBN with documentary evidence for monitoring capital inflows
and outflows.
essentially in place both for the protection of investors as well as to
provide the CBN with documentary evidence for monitoring capital inflows
and outflows.
“Although over time the CCIs have been
re-issued, consolidated and re-constituted to reflect the changing MTN
capital and shareholding structure, the amount of $402, 625,419, has
remained the same.
re-issued, consolidated and re-constituted to reflect the changing MTN
capital and shareholding structure, the amount of $402, 625,419, has
remained the same.
“One aspect of the changing capital structure was the conversion of shareholder loans to preference shares.
“It is important to note that all the
historic dividends were declared against valid equity CCIs and in fact
no preference dividends were declared and no interest in respect of
these preference shares was paid,” he said.
historic dividends were declared against valid equity CCIs and in fact
no preference dividends were declared and no interest in respect of
these preference shares was paid,” he said.
He added that as regards the Attorney
General letter, he notified MTN that his office made a high-level
calculation that MTN Nigeria should have paid approximately $2 billion
in taxes.
General letter, he notified MTN that his office made a high-level
calculation that MTN Nigeria should have paid approximately $2 billion
in taxes.
He said the taxes were related to the
importation of foreign equipment and payments to foreign suppliers over
the last 10 years and he requested MTN Nigeria to do a self-assessment
of the taxes in this regard that have been actually
paid.
importation of foreign equipment and payments to foreign suppliers over
the last 10 years and he requested MTN Nigeria to do a self-assessment
of the taxes in this regard that have been actually
paid.
“In August 2018 MTN submitted comprehensive documentation to the office of the AG.
“MTN Nigeria has also completed an
initial assessment of the full period which indicates that total
payments made to the tax authorities in regard to these foreign imports
and payments in aggregate are $700 million. There are
valid reasons for the differences between the actual payments and the
AG high-level assessment.
initial assessment of the full period which indicates that total
payments made to the tax authorities in regard to these foreign imports
and payments in aggregate are $700 million. There are
valid reasons for the differences between the actual payments and the
AG high-level assessment.
“We were notified by the office of the AG
last week that they have not accepted the documentation presented and
they have given notice of an intention to recover the $2 bn from MTN
Nigeria..
last week that they have not accepted the documentation presented and
they have given notice of an intention to recover the $2 bn from MTN
Nigeria..
MTN Nigerian business brings in a third of its annual core profit, or EBITDA.
Shares in MTN fell 17 percent to 72 rand
at 1315 GMT, bringing losses since last Thursday, when the central bank
issued its demand, to nearly a third.
at 1315 GMT, bringing losses since last Thursday, when the central bank
issued its demand, to nearly a third.
MTN, which has expanded in more than 20
frontier markets including war-ravaged Syria and Afghanistan, called the
latest demands by Nigerian authorities “regrettable and disconcerting”.
frontier markets including war-ravaged Syria and Afghanistan, called the
latest demands by Nigerian authorities “regrettable and disconcerting”.
“We remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position,” it said.
*This story has been largely modified and
the headline altered to accommodate MTN Nigeria’s reaction to the new
tax of $2billion slapped on it by Nigeria’s government.
the headline altered to accommodate MTN Nigeria’s reaction to the new
tax of $2billion slapped on it by Nigeria’s government.
