MTN Nigeria's tax battle with the country's attorney general continued yesterday as lawyers for both sides made legal arguments in a Lagos court.
According to Reuters, lawyers representing Nigeria's attorney general argued yesterday that MTN did not have grounds to oppose a $2 billion tax bill. The Nigerian attorney general handed MTN the tax bill last September, but the telco said the attorney general had exceeded his powers in making the demand and said the claim was without merit.
In a separate matter, the Central Bank of Nigeria (CBN) in August 2018 demanded MTN repatriate $8.1 billion (R117 billion) to Nigeria, which the bank said the company had sent abroad in breach of foreign exchange regulations, which MTN denied.
In December 2018, MTN agreed to make an almost $53 million payment to resolve the dispute. At the time, it said MTN Nigeria and the CBN had agreed it would pay a notional reversal amount of $52.6 million, without admission of liability. This was for a 2008 private placement remittance worth around $1 billion that the CBN found was based on certificates that did not have final approval.
However, this did not settle the tax issue with the Nigerian attorney general, who is demanding $2 billion (R29 billion) in taxes relating to the importation of foreign equipment and payments to foreign suppliers since 2008.
MTN went to court seeking to block the attorney general from taking further action regarding the order for back taxes.
The case was yet again adjourned yesterday, this time until 7 May. The hearing was first scheduled for 8 November 2018, then moved to 3 December, then 7 February 2019 and then to 26 March 2019.
MTN is Africa's biggest telecoms firm and Nigeria is MTN's biggest market, accounting for a third of the African telecoms giant's annual core profit.
According to Bloomberg, MTN's shares recovered from their biggest decline in more than five months to close almost flat on the Johannesburg Stock Exchange yesterday. Bloomberg data shows MTN fell as much a 6.8%, the most since 5 October, before trimming losses to 0.1% by the close of trade.
MTN's share price has fallen over 19% in the past 12 months and has dropped 16% since it was hit with the repatriation penalty in mid-2018.
MTN is still planning to list its Nigerian unit in Lagos once the tax issue is resolved.