MTN Shares Down 7% After FG Slams $2bn Tax Bill

MTN Shares Down 7% After FG Slams $2bn Tax Bill


Post Views: 535 For mobile telecommunications giant- MTN Communications Nigeria, it no longer just rain, it pours. It is now a tale of one week, one t...

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For mobile telecommunications giant- MTN Communications Nigeria, it no longer just rain, it pours. It is now a tale of one week, one trouble.
While it is trying to convince the Central Bank of Nigeria (CBN) of its innocence in the allegation of funds repatriation via forged Certificates of Capital Importation (CCI), following which it was asked to refund $8.14bn, the Federal Government has slapped the company with another $2bn tax bill.
Investors have reacted negatively, as shares of the wireless telecom operator lost over 7%, just after shedding 15%, owing to the CBN hammer.
In a note to the JSE Stock Exchange (JSE) dated September 4, 2018, MTN said it was appropriate to update the market on its latest engagement with Abubakar Malami, the Attorney General of the Federation concerning investigations into tax compliance in the country.
Such tax issues the AGF engaged various corporates in the country on, MTN told investors, included “import duties, VAT and withholding taxes on foreign imports/payments.
“In this process, his office made a high-level calculation that MTN Nigeria should have paid approximately $2.0bn taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years.”
The AGF, who is also Minister of Justice also asked the telecom giant to undertake a self-assessment in this regard on what has been actually paid.
The statement said in August 2018, it submitted a comprehensive documentation for the period to the AGF indicating “that total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are $700m.”
Continuing, it explained that “there are valid reasons for the differences between the actual payments and the AG’s 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 $2.0bn from MTN Nigeria.
“Based on the detailed review performed, MTN Nigeria believes it has fully settled all amounts (owed) under the taxes in question.”
It expressed regret, just as it is disconcerting that “these matters are being reopened,” despite the historic engagements with the Nigerian authorities, as well as the Senate investigation into the CCI matter and the multiple tax assessments done by the Nigerian tax authority over many years that were satisfactorily concluded.
MTN promised to continue engaging “with the relevant authorities on all these matters and we remain resolute that MTN Nigeria has not committed any offences and will vigorously defend its position.”
The statement, nonetheless assured that MTN “will provide further information as and when available,” just as advised shareholders “to continue to exercise caution when dealing in the Company’s securities until a further announcement is made.”