Telecom

MTN Nigeria faces $72.5mlln tax arrears, but with limited cash flow impact

MTN Nigeria faces $72.5mlln tax arrears, but with limited cash flow impact
Thursday, 26 October 2023 20:47

The Lagos State Tax Appeals Tribunal has ordered MTN Nigeria to pay $72.5 million in tax arrears to the Federal Inland Revenue Service (FIRS). This amount covers the period from 2007 to 2017. The verdict was pronounced following an appeal by the local subsidiary of the South African telecoms group.

The dispute began in May 2018, when the Federal Attorney General's Office published a report on certain tax returns made by MTN Nigeria for the financial years 2007 to 2017, particularly concerning VAT and certain withholding taxes. In July 2021, FIRS issued an initial VAT assessment of $93.6 million against MTN, including $72.55 million as principal and $21.04 million for penalties and interest.

MTN contested this assessment and a revised one was issued on April 14, 2022, bringing the amount to $135.7 million. Although the principal amount of tax due was reduced to $48 million, interest and penalties increased to $87.9 million. Subsequently, the company appealed to the Tax Appeal Tribunal. After review, the tribunal ruled in favor of the Lagos tax authorities in collecting the principal amount of $72.5 million and canceled the penalties in MTN's favor.

This amount is not unbearable for MTN Nigeria, which ended the first half of 2023 with a free cash flow of almost 500 billion naira ($632 million). However, it should be noted that this sum is far greater than the overall provisions made by the company for possible unfavorable court rulings, which at the start of the year stood at just 22 billion naira.

This is not, however, likely to pose a risk to the company's performance on the Lagos Stock Exchange, where it is listed. Its share price has gained 26.9% since the beginning of the year, according to data consulted by Ecofin Agency. Net income per share halved in the second quarter, but MTN Nigeria's growth prospects continue to attract investors.

Although the MTN Group is the dominant shareholder in its Nigerian subsidiary, with a 70.7% stake, big names like BlackRock are also shareholders. Mazzi Asset Management, an all-black South African investment firm, has increased its stake to become the second largest institutional shareholder with 16.5 million shares.

On the same topic
Plan aims to build a fully digitized health system by 2029 Strategy centers on unified data, secure platforms, and wider digital...
Partnership seeks to boost local gaming and gamification solutions Program will build a national platform for start-ups across key sectors Initiative...
Zambia launches a three-pillar strategy focused on energy security, national infrastructure sharing and faster rollout of telecom towers. The...
Supports National AI Strategy to boost digital skills and job readiness Govt promotes AI tools, coding, and data-driven learning in institutions...
Most Read
01

DRC met Alibaba, Isoftstone to discuss adapting China’s e-commerce model Joint working group ...

DRC in Talks with Alibaba, Isoftstone to Develop a Chinese-Style E-Commerce Model
02

The new unified platform replaces the NIBSS Instant Payments system. It connects banks, finte...

Nigeria Launches National Payment Stack, Targets Faster Digital Transactions
03

DRC minister visited Huawei China center to boost AI training cooperation Talks focused on launch...

DRC, Eyeing AI for Farms and Mines, Seeks to Launch Academy with China’s Huawei
04

Ghana to allocate $2.8B in 2026 budget for major road infrastructure push Funding targ...

Ghana to Allocate $2.8 Billion for Road Development in 2026
05

Somalia and Algeria signed multiple agreements covering education, agriculture, energy, diplomacy,...

Somalia’s President Sheikh Mohamud Signs Multiple Cooperation Agreements in Algeria
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72


EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.