A Federal High Court in Lagos in its judgment delivered on Tuesday upheld the $87.9 million penalty imposed on MTN Nigeria Communications Plc by the Federal Inland Revenue Service (FIRS).
Ruling on the appeal filed by the revenue agency on the tax liability of the Mobile Network Operator (MNO), Justice Ayokunle Faji, delivered his judgment in favour of the FIRS, setting aside a previous ruling by the Tax Appeal Tribunal (TAT), which had only awarded MTN a principal sum of $71 million in a tax dispute.
The tribunal had refused to grant additional penalties and interest as requested by FIRS, leading the tax agency to appeal the decision.
The judge stressed that the TAT erred in law by excluding the penalties and interest arising from MTN’s principal value-added tax (VAT) liability.
He maintained that the Tribunal’s refusal to grant the additional fines was unjustified and declared that MTN must comply with the full penalty sum.
Justice Faji ruled: “The decision of the TAT that interest and penalties were not due is hereby set aside,” affirming the original fines imposed by FIRS.
In its defence, the telecoms operator had argued that the TAT’s dismissal of the penalties was legally justified, pointing out that the application of the Company Income Tax Act (CITA) to the matter was inappropriate.
However, the High Court disagreed with defence of MTN Nigeria and granted FIRS the reliefs it sought in the appeal.
The $87.9 million penalty included both the principal VAT sum and the accumulated interest, marking a key development in Nigeria’s tax enforcement strategy.
Experts believe that court’s ruling has significant implications for the country’s telecommunications sector, underlining the importance of full compliance by operators with tax laws and full enforcement of penalties for violations.
