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MTN Nigeria approaches tax tribunal to treat fine imposed as an operating cost.

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Bitten by heavy penalty imposed by the Nigerian government , MTN Nigeria has  questioned the legality of paying corporate tax on a 330 billion naira ($1.1 billion) fine before a Nigerian tax tribunal

It may be recalled that MTN Nigeria, a part of South Africa’s MTN Group, was fined 1.04 trillion naira originally for failing to deactivate more than 5 million unregistered SIM cards. However, it negotiated for  a reduced fine to  make it eligible for listing on the Nigerian Stock Exchange, a few months ago. 

MTN Nigeria requested for  the judicial review after the Nigerian tax authority- the Federal Inland Revenue Service (FIRS)- disagreed on the accounting treatment of the fine. The company treated it as an  operating cost. The prayer of MTN Nigeria before the tax tribunal is to treat the fine as an operating cost, presumably for reflecting it in the profit and loss account. But Federal tax authorities do not toe in that line and is reportedly asking the company to pay it upfront as  a penalty. The tribunal’s decision is crucial in this regard. If a favorable decision is obtained, the company can claim tax exemption on the business expenses.  

The telecoms company listed its shares on the Nigerian stock market in May in a floatation that valued it at US$6.5 billion, turning it into the second biggest company on the exchange. It may be noted that listing in the Nigerian stock market was a pre condition for reducing the penalty from the whopping 1.04 trillion naira to 330 billion naira.  Significantly, Nigeria is MTN’s biggest market, with 58 million users in 2018 and it accounts for a third of the South African group’s core profit

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