The Federal Government has served a$2 billion tax notice on MTN Group being the telcos computed tax liabilities over the past decade.
A news sourced from Reuters.com indicated that the announcement of the tax bill incurred over the last decade came a few days after the Central Bank of Nigeria (CBN) ordered MTN’s Lagos-based unit to hand over $8.1 billion that it said was illegally sent abroad.
The telco in a statement disclosed it had been in talks with Nigeria’s Attorney General about an investigation into tax compliance, outlining the background to the case of the money sent out of the country.
MTN stated: “In this process, his (the Attorney General’s) office made a high-level calculation that MTN Nigeria should have paid approximately $2.0 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers over the last 10 years.”
MTN, whose Nigerian business brings in a third of its annual core profit, or Ebitda, said its total payment of around $700 million over the 10-year period fully settled the amount owing under the taxes in question.
The latest demands come two years after MTN, Africa‘s biggest telecoms company, agreed to pay more than $1 billion to end a dispute with Nigeria over unregistered SIM cards.
Shares in MTN dropped 5.6% to R81.95 as of 12:50 GMT, bringing losses since last Thursday, when the central bank issued the $8.1 billion demand, to nearly 25%.
Commenting on the development, a portfolio manager at Vestact in Johannesburg Byron Lotter, said: “These are old issues that have been investigated and closed but now they are being reopened.
“I’m not surprised that a lot of people are selling and saying ‘these guys are just too volatile, I’m out’. I wonder if MTN are thinking the same”, Lotter added
According to online reports, South African hotels and casino group, Sun International, is reported to have indicated plans of exiting Nigeria following clashes with regulators and shareholders.
It would be recalled that retailer Woolworths and food maker Tiger Brands, had both exited Nigeria over the last three years.
MTN, which has expanded in more than 20 frontier markets that include war-ravaged Syria and Afghanistan, called the latest demands by Nigerian authorities “regrettable and disconcerting”.
“MTN Nigeria will 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,” the company said.
Nigeria’s attorney general, Abubakar Malami, declined to comment, referring Reuters to a spokeswoman at the ministry of justice. She could not immediately be reached by phone.
MTN’s regulatory troubles in the oil-rich country come ahead of next year’s presidential election, in which Nigerian President Muhammadu Buhari, who swept to power on promises of tougher regulations and a stronger fight against corruption in a 2015 election, is seeking re-election.
But analysts say Nigeria’s demands against MTN risk further undermining its efforts to shake off an image as a risky frontier market for investors.