MTN Group has not seen the end of its troubles in Nigeria as authorities are asking the company to pay $2 billion in back taxes.
The office of Nigeria’s attorney general had calculated that MTN owes Nigeria $2 billion in relation to the import of foreign equipment and payments to foreign suppliers over the last 10 years. It asked the telco to carry out a self assessment of the taxes paid in this regard.
In its self assessment, MTN said it had owed $700 million and had paid same, a position rejected by the attorney general’s office, which issues a notice to recover $2 billion from MTN Nigeria.
“It is both regrettable and disconcerting that despite the historic engagement with the Nigerian authorities by MTN Nigeria, the Senate investigation into the CCI matter, and the multiple tax assessments done by the Nigerian tax authority over many years that were satisfactorily concluded, that these matters are being reopened,” said a note by Sandton-based security brokerage services provider Deutsche Securities (Pty) Limited.
Recent actions by Nigerian authorities against MTN have been seen by many as a way of getting additional revenue. Others have seen it as the government’s way of tightening up the country’s regulatory framework.
“We are trying to build integrity into our processes. Some of these institutions with very bad culture need to be told that actions have consequences,” Ikpenmosa Uhumuavbi, a Lawyer and International Finance expert told The Nerve Africa last week when the Central Bank of Nigeria told MTN to return a total of $8.134 billion, which it said the company illegally transferred out of the country over eight years.
Uhumuavbi said some foreign companies do not respect extant rules and regulations. “Companies operating in Nigeria should be seen to uphold the basic tenets of compliance to our laws and regulations,” he said, adding that the CBN must have properly investigated before making the pronouncement.
“The company in question has a history within the market. It has been fined in the past by another regulator.”
While the issue with the attorney general’s office may be seen to support Uhumuavbi’s stance, it is important to note that MTN had only accepted guilt on failure to disconnect improperly registered SIM cards.
With the pronouncement of CBN last week, there were reports that the company’s planned listing in Nigeria may be put on hold.
“MTN’s Nigerian IPO was always dependent on market conditions and Group CEO Rob Shuter has noted that the new announcement has complicated this arrangement,” South African Wealth Coach Samke Mhlongo noted on Sunday.
The tax issue further complicates MTN’s position in Nigeria, its most prolific market. According to Bloomberg, Shuter said on Monday that MTN remain committed to Nigeria despite the troubles.
The company’s stock lost 17.05 percent of its value on Tuesday closing at R72.00 ($4.7).