Court Upholds $87.9 Million Fines and Interest on MTN by FIRS

Justice Ayokunle Faji of the Federal High Court in Lagos has affirmed the $87.9 million fines and interest imposed on MTN Nigeria Communications Plc by the Federal Inland Revenue Service (FIRS).

The court delivered its verdict following an appeal filed by FIRS against the Tax Appeal Tribunal’s (TAT) ruling of October 20, 2023. The TAT had originally awarded MTN a principal sum of $71 million but had not granted the penalties and interest sought by FIRS.

Dissatisfied with this ruling, FIRS approached the Federal High Court, urging it to set aside the TAT’s decision and enforce the penalties and interest on the principal sum. In the appeal, FIRS sought an order for MTN to pay the accumulated penalties and interest arising from the principal value-added tax (VAT) sum awarded by the tribunal.

The tax agency raised two key issues in its appeal. It questioned whether the Tribunal was correct in refusing to grant penalties and interest after confirming that the goods and services purchased by MTN were subject to VAT. FIRS also asked the court to determine whether the Tribunal had applied the appropriate provisions of the Company Income Tax Act (CITA) in relation to the penalties and interest under the VAT Act.

In response, MTN argued that the Tribunal was right in dismissing the penalties and interest imposed on its alleged principal VAT liability. The company contended that the Tribunal had properly interpreted the relevant sections of the FIRS Act, and MTN argued that FIRS’s appeal did not align with the Notice of Appeal.

In his judgment, Justice Faji sided with FIRS, ruling that the penalties and interest imposed were due. He stated, “The decision of the TAT that interest and penalty are not due to be paid by the respondent is hereby set aside. This appeal, therefore, succeeds. I grant the three reliefs sought, as prayed.”

This decision effectively upholds the $87.9 million in fines and interest imposed on MTN by FIRS.