ZAMBIA Revenue Authority has frozen MTN Zambia bank accounts for alleged fraudulent activities including failure to pay taxes amounting to over K95 million in Value Added Tax and penalties.
MTN Zambia woke up to a rude shock on 24th July, 2017 when they could not access their accounts at FNB Bank Zambia, Stanbic Bank and Stanchart Bank as the facilities had been frozen.
This was after the taxman had earlier rejected an appeal from MTN against a Notice of Assessment in the sum of K95,413,369 in unpaid taxes, penalties, interest and lieu of prosecution due to delayed payment.
Last year, MTN Nigeria was in a similar situation as the yellow mobile service provider was fined USD 3.9 million for failing to comply with SIM registration procedures and regulations in the West African country.
ZRA issued a demand notice in the amount of K95,413,369 as due payment owed under the VAT Act, but also discovered that there was a wrong claim of over K13,796,806 made without supporting invoices. The Commissioner General rejected an appeal against the assessment which included claims that the mobile service company put in claims of over K13 m that was unsubstantiated. MTN however ran to the Constitutional Court with a petition against ZRA’s action to freeze their accounts with claims that it had paid in full its tax obligations.
But MTN has withdrawn the petition filed against the freezing of its accounts in which it contended allegations of unpaid taxes despite its own admission that the mobile service company claimed the amount of K K13, 796,806 erroneously. According to the court documents filed on 25th July, 2017, MTN senior manager of finance Aaron Mwamba admitted the company had made an additional claim of K13, 796,806 in unsubstantiated claims under VAT by error. “That on 18th July, 2017, the respondent issued a Notice of Assessment (the Notice) to the applicant setting out various tax charge payments, interest, fine in lieu of prosecution and fine and interest for late payment and return submission indicating the sum of ZMW 95,413,369 that were allegedly due for payment by the applicant under the provisions of the Value Added Tax Act. ZRA had issued a Notice of Assessment amounting to K95,413,369 following the company’s failure to clear unpaid taxes including penalties and interests, fine in lieu of prosecution and also return submissions among others and the K13,796,806 without supporting documentations. Mr Mwamba explained further that MTN became aware of the frozen accounts last week when they could not access their company accounts held with FNB Bank Zambia Limited, Stanbic Bank and Stanchart Bank respectively. The mobile service provider objected the move by ZRA commissioner general claiming that MTN had correctly pushed in claims for the K13,796,806 within its entitlements at law, and that it “was not an attempt to make a fraudulent recovery of tax”. He explained that the over K13m claim was based on actual tax invoices which MTN was entitles to and that the Treasury did not suffer any loss of Tax Revenue as a result of the claim. He told the Constitutional Court that MTN already paid all it taxes in full as obligated by law, and that the amounts being demanded by the taxman were not provided for by the law, and has since requested the taxman to declare that the mobile service provider In the appeal, MTN indicated that the single line entry submitted for input tax was an unfortunate clerical area error which was not meant as deceit, but that ZRA Commissioner General threw out assertions of error in the claim of the over K13m in VAT returns.