Nigerian court to rule on jurisdiction in $2-billion MTN tax dispute

A Nigerian court is expected to hand down judgment on Tuesday in the ongoing battle between the West African nation’s attorney-general and MTN, with the AG claiming the South African-headquartered telecommunications group owes US$2-billion in unpaid duties and taxes.

The substance of the matter won’t be dealt with in Tuesday’s judgment, but rather two applications brought by MTN seeking interlocutory relief (to stop the AG from taking measures such as freezing MTN Nigeria’s bank accounts) and to have the AG’s letter of demand declared invalid.

The $2-billion in back taxes demanded by the AG is the last significant matter that MTN Nigeria needs to resolve with authorities there. The company previously agreed to settle a dispute over repatriated dividends with the Central Bank of Nigeria, agreeing in December 2018 to cough up $53-million after the Bank had ordered it to bring back $8.1-billion.

MTN Group shares plunged 22% on 30 August 2018 when it emerged that the central bank had ordered four banks to refund the $8.1-billion it claimed was illegally expatriated by the telecoms provider between 2007 and 2015.

The AG’s measure on taxes followed soon after the Central Bank’s demand.

Speaking to TechCentral on Monday evening, ahead of the expected court judgment, MTN Group chief legal counsel Michael Fleisher said that whatever the court decides on Tuesday, both parties have the right to appeal.

“The judge could determine this issue in favour of MTN Nigeria, which means that our two applications that have been filed … continue to be heard. Alternatively, the judge could rule in favour of the AG, that we didn’t file (our court application) timeously,” he said.

Right to appeal

“Both parties have the right to appeal. In any event, even if (the court) rules in favour of the AG, and assuming we don’t appeal, all it means the AG has locus standi to participate in this matter. Clearly, MTN Nigeria’s view … is that we don’t owe these taxes that are being claimed.”

Fleischer said it’s “difficult to predict” when the substance of the dispute between MTN and the AG might come before the courts. If either the parties decides to appeal Tuesday’s judgment, this process is likely to take several more months, he said.

“We haven’t even entered into a defence yet of the taxes themselves. We’ve asked who the right party is to be dealing with if there are taxes due. The right parties, in our view, are the Nigeria Customs Service, for duties, and the Federal Inland Revenue Service, for tax.

“What we are dealing with here is the AG’s jurisdiction to deal with the matter. We haven’t even got into the issues of dealing with a substantive matter on outstanding tax. However, we have said from the outset that MTN Nigeria’s taxes and duties are up to date. And we are not in a dispute with either of the two revenue authorities.”

MTN Group, meanwhile, is pressing ahead with a planned listing in Lagos. According to reports, the Nigerian Stock Exchange confirmed on Monday that it has received MTN’s listing application.  — © 2019 NewsCentral Media