• Firm's share drops further by 33%, rejects AG's claims
• Investors differ on fines over proposed Nigeria’s IPO
It is fresh trouble for MTN as the Federal Government, through the office of the Attorney General (AG) of the Federation, has asked it to pay $2 billion as tax on import duties and VAT and for withholding taxes on foreign imports/payments over the last 10 years.
By this new development, MTN’s shares on the Johannesburg Stock Exchange tumbled more than 17 per cent yesterday. The drop takes the stock's losses since last Thursday to nearly 33 per cent and underscores market concerns over the company's mounting woes in the West African country.This new charge on the South African telecommunications firm came barely a week after the Central Bank of Nigeria (CBN) asked the company to refund $8.1 billion repatriated out of the country without proper documentations.
In a statement by its Public Relations Manager, Funso Aina, however, MTN explained the tax dispute and refuted the accusations. It said: "Following the receipt of the letter from the Central Bank of Nigeria on foreign exchange repatriation, MTN Nigeria has today (yesterday) 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 $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 provided further clarity on the company's position. MTN equally strenuously rejects the findings of the Attorney General's investigation and believes it has fully settled all amounts (it was) 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, these matters are being reopened."
On the attorney general's 'demand notice' for historical tax obligations, MTN’s Corporate Relations Executive, Tobe Okigbo, said: "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."
The firm said it would continue to engage 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."
Meanwhile, the Association of Telecommunications Companies of Nigeria (ATCON), through its president, Olusola Teniola, has expressed surprise that the Attorney General’s office is involved in tax issues, when there is a Federal Inland Revenue Service (FIRS) that deals with such matters.
“It would appear that there needs to be full disclosure as to why the Attorney General’s office is taking this line and why it has come up with this high-level demand of $2 billion. Who calculated it? Is it the Attorney General’s office or the FIRS because it would appear that all audited accounts of MTN have been submitted to the FIRS over the years? So, why is it now, at this point in time, that the Attorney General’s office is questioning the audited accounts that have been rendered under the Nigerian law? It is not clear to stakeholders why this is happening now,” Teniola said.
On whether the fines would affect MTN’s coming into the market this year, the national president of Constance Shareholders Association, Shehu Mallam Mikail, said: “MTN should be equal to the task. They were aware of the consequences of these defaults before they contravened the law. I do not think that this will affect their proposed listing because it is not part of the conditions giving by the MTN Group earlier.”
But an independent investor, Amaechi Egbo, insisted the huge fine levied on the MTN Group would constitute a threat to the telecoms giant’s proposed listing on the stock exchange.He noted that the development could alter the firm’s arrangements, as the management might not have made provisions for the heavy fines.