Monrovia – One of the biggest providers of mobile telecommunications services in Africa MTN is facing another troubling moment after the brand under which it operates in LoneStarCell Communications Corporation lost a court appeal and has been judged liable by the Supreme Court of Liberia to pay an amount of US$2.3 million in tax obligations to the Government of Liberia.
“Accordingly, the appellant is adjudged liable to the Government in tax obligations in the amount of US$2,376,098.78.
The Clerk of this Court is hereby ordered to send a mandate to the lower court directing the judge presiding therein to resume jurisdiction over the case and to give effect to the Judgment of this court.
Costs are ruled against the appellant. AND IT IS HEREBY ORDERED”- Unanimous Judgment, Supreme Court of Liberia
MTN Liberia, known as LoneStarCell Communications Corporation lost the case in the Tax Court but the company took an appeal against the lower Judge ruling but the Supreme Court of Liberia has judged the company liable and ordered full payment of the amount of US$2,376,098.78.
On Friday, all four associate justices along with the Chief Justice on the Supreme Court of Liberia bench concurred on the judgment ordering the lower court to resume jurisdiction over the case and ensure LoneStarCell Cell pays the amount representing taxes on expatriates salaries in the amount of US$956,786.20 and withholding on non-residents in the amount of US$889,682.38 plus interest of US$159,391.99 and US$370,238.21respectively thereon, totaling an accumulated amount of US$2,376,098.78.
This is another big financial blow to MTN after MTN Nigeria was recently fined a hefty $5.2 billion by the Nigeria Communications Commission in which the mobile operator on February 24, 2016 announced the payment of $250 million as advance payment towards the settlement of the proposed penalty through out of court settlement.
On June 10, MTN Nigeria announced the payment of the sum of N300bn less than $1 billion as the final settlement of the fee demanded by the Federal Government of Nigeria.
In Liberia, MTN did not go for out of court settlement after the Tax Court ruled in the case the Liberia Revenue Authority vs the LoneStarCell Communications Corporation.
In September 2015, the Judge of the Tax Court, Mozart Chesson, ruled that the company is obligated to the Government of Liberia for US$1.8 m plus penalties but LoneStarCell took exception to the ruling and filed an appeal before the Supreme Court.
Before Judge Chesson’s ruling, the Board of Tax Appeal of Liberia after a complaint from the Government of Liberia mandated that LoneStarCell was obligated to the Government in the amount of US$19.2 million for unpaid taxes.
Both LoneStarCell and the Government through the Liberia Revenue Authority took exceptions to Judge Chesson’s ruling.
In a statement issued after Judge Chesson’s ruling, LoneStarCell stated “The Judge’s decision leaves scholars pondering since the ruling is based on “procedure error”. Others are asking why an institution once certificated by the government of Liberia as the largest tax payer is being singled out”.
LoneStarCell noted in the statement that its financial dealings remain impeccable and replete with values such as complete accountability and integrity.
Tax Court Judge erred
In disposing of the appeal, the Supreme Court stated that having heard the legal arguments advanced by the parties, reviewing the facts and attending circumstances revealed by the records, and examining the laws controlling it was satisfied and convinced that the Tax Court Judge committed errors in handling and disposing of the appeal brought before him.
The court maintained that the Board of Tax Appeals ruling is supported by the facts of the case and the law appertaining thereto.
In a six count judgment, the Supreme Court stated “That the ruling made by the Tax Court is reversed and the ruling by the Board of Tax Appeals is affirmed with respect to the following “that the appellant was not without the time period allowed by the Revenue Code of Liberia Act of 2000, as amended, in submitting its appeal to the Board of Tax Appeals and therefore the Board of Tax Appeals had jurisdiction to entertain the appeal”.
The Supreme Court also declared “that the Board of Tax Appeals also did not err in disallowing the imposition on LCC of tax on amounts totaling US$2,081,042.32 which LCC had paid to PLC as fees for management services but which PLC had not included in its tax returns as income, the decision being in recognition that PLC, a corporation operating under the laws of Liberia can sue and can be sued, and that the appellee has the authority to sue the PLC for recovery of the taxes on the amount received by it from LCC”.
The high court also stated in count six of the judgment “That the Board of Tax Appeals did not err in ruling that under the Revenue Code of Liberia Act of 2000, as amended, the appellee has the authority to re-characterize certain arrangements entered into by a taxpayer and other parties with taxable implications and that under the said authority the appellee acted properly in re-characterizing in the taxable period 2009-2011 the taxes on expatriates salaries, inclusive of withholding on non-residents in the amount of US$956,786.20 and withholding on non-residents in the amount of US$ 889,682.38, plus interest of US$159,391.99 and US$370,238.21 respectively thereon, totaling an accumulated amount of US$2,376,098.78”.
In its judgment, the Supreme Court rendered unanimous decision signed by all four associate Justices along with the Chief Justice.
“Accordingly, the appellant is adjudged liable to the Government in tax obligations in the amount of US$2,376,098.78.
The Clerk of this Court is hereby ordered to send a mandate to the lower court directing the judge presiding therein to resume jurisdiction over the case and to give effect to the Judgment of this court. Costs are ruled against the appellant. AND IT IS HEREBY ORDERED”, the judgment stated.
The high court decision will be a big financial blow to the company operating in a small economy and facing stiff competition from a rival Cellcom Liberia.