Other panel members were Barrister P. A. Olayemi, Barrister Babatunde Sobamowo, Barrister Samuel N. Ohwerhoye, and Barrister Terzungwe Gbakighir.
The Attorney General of the Federation had on May 10, 2018, issued a report of its investigation into the MTN’s Forms A and M transactions. The information covered the 2007 to 2017 accounting years.
In a revised report dated August 20, 2018, the AGF adjusted the alleged outstanding in respect of import duty and VAT to the tune of N242.2 billion (Form M -visible transactions), whilst the section relating to VAT and Withholding tax (WHT) was revised $1.284 billion (Form A invisible transactions).
The processes also stated that sometime in mid-2020, the FIRS informed the MTN that it had received a report from the OAGF regarding its alleged liability to VAT and WHT.
FIRS consequently reviewed the MTN’s tax and accounting records and upheld the OAGF’s alleged tax liability.
However, MTN and its tax consultant, KPMG Advisory Services, held a series of meetings with the FIRS to resolve the dispute arising from MTN’s alleged tax liability.
After that, in July 2021, the FIRS issued a VAT assessment of $ 93,590 366 million to the MTN. This assessment comprised $72 551 059 million as the principal liability and $21,039,807 million for penalties and interest on the principal sum (first assessment).
However, MTN objected to the first assessment, and the FIRS further reviewed the evaluation. Accordingly, by the Notice of Assessment dated April 14, 2022, the Respondent issued a revised estimate for US $135,697,755 million to MTN as a revised assessment.
Although the principal amount of tax alleged to be outstanding and due from the Appellant (primary tax liability) in the revised assessment, i.e. $47, 776, 210 million, is less than the alleged principal tax liability contained in the first assessment, i.e., $72,551,059 million, the interest and penalty imposed by the FIRS on the alleged primary tax liability in the revised estimate, i.e. $87.900 million, is higher than the interest and sentence charged by the FIRS on the alleged principal tax liability in the first assessment, i.e., US $21, 039,807 million.
The MTN, by a letter of notice of objection dated May 13, 2022, objected to the FIRS’s revised assessment, and FIRS, by a letter dated June 16, with ref. No. FIRS/TID/LOS/2020/0213/01 notified the MTN of its refusal to amend the revised assessment.
Dissatisfied with the FIRS’s amended revised assessment, MTN filed the Appeal before the Tax Appeal Tribunal.
Upon reviewing all the processes filed by the parties, the tribunal distilled five issues for determination: “Whether given the clear and unequivocal provisions of the VAT Act before the amendment by the Finance Acts, the condition of software licensing and upgrades qualified as a taxable supply of goods and services.
“Whether the provision/lease of bandwidth capacities by Intelsat Global Services & Marketing Ltd, a non-resident entity, through transponders located in the satellite, qualifies as a taxable supply of goods and services.
“Whether in the absence of the production of any false or untrue document or statement by the Appellant, the Respondent has authority to conduct a tax investigation beyond the 5-year restriction.
“Whether training provided by offshore facilitators outside of Nigeria is liable to VAT in Nigeria.
“Whether the Respondent acted in error when it calculated and imposed interest and penalty on the Appellant’s alleged non-remittance of VAT liabilities, the said liabilities having not become final and conclusive.”
While counsel to MTN urged the tribunal to determine the issues in its favour, FIRS counsel, who includes Abu Ocheme, Director Legal FIRS, Egodi Adedeji and Moses Ideho, urged the court to dismiss the MTN’s appeal and determined the issues raised in FIRS’s favour.
The tribunal, after taking arguments on the parties, determined issues one to four in favour of the FIRS while determining the fifth issue in turn of MTN.
The tribunal, after perusing all the processes filed by parties and citing a plethora of authorities, held that: “in the final analysis, it is the decision of this Honourable Tribunal that issues One to Four discussed above are all resolved in favour of the Respondent and the appellant is therefore ordered to settle the assessed liabilities accordingly.
“However, issue five about penalty and interest is resolved in favour of the Appellant and is therefore set aside by this Honourable Tribunal. This is our Judgement.”
