FIRS Engages Banks to Recover N1.82tn from MultiChoice

*We are discussing with tax authorities, says company

James Emejo in Abuja

The Federal Inland Revenue Service (FIRS) has commissioned some banks to recover N1.82 trillion from the accounts of MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA).

Preparatory to the collection of the amount, which is arrears of tax liabilities of the companies, the agency has also ordered that all local bank accounts of the two organisations, owners of pay television, DSTV, should be frozen.

FIRS Executive Chairman, Mr. Muhammad Nami, said yesterday that the decision to appoint the banks as agents and to freeze the accounts were due to the group’s continued refusal to grant FIRS access to its servers for audit.
But in a swift response, MultiChoice Nigeria said it had the media statements made by the FIRS, but had not received any notification from the agency.

“MultiChoice Nigeria respects and is comfortable that it complies with the tax laws of Nigeria.
“We have been and are currently in discussion with FIRS regarding their concerns and believe that we will be able to resolve the matter amicably,” the company added.

However, Nami accused the companies of breaching all agreements and undertakings with the agency and for not responding to correspondences.

Nami, in a statement by the Director, Communications and Liaison Department, FIRS, Mr. Abdullahi Ahmad, said Multichoice, “lacked data integrity and are not transparent as they continually deny FIRS access to their records.”
He added that it is important that Nigeria ends all tax frauds that have been going on for too long.

According to him, all companies must be held accountable and made to pay their fair share of taxes, including back duty taxes owed, especially VAT for which they are ordinarily agents of collection.
He accused MultiChoice Nigeria of avoiding to give the FIRS accurate information on the number of its subscribers and income.

He also accused the companies of being involved in the under-remittance of taxes, which necessitated a critical review of its tax-compliance level.
The statement added that the group’s performance does not reflect in its tax obligations and compliance level in Nigeria.

Nami said: “The level of non-compliance by MultiChoice Africa (MCA), the parent company of MultiChoice Nigeria (MCN) is very alarming. The parent company, which provides services to MCN, has never paid Value Added Tax (VAT) since its inception.

“The issue with tax collection in Nigeria, especially from foreign-based companies conducting businesses in Nigeria and making massive profit is frustrating and infuriating to the Federal Inland Revenue Service (FIRS).
“Regrettably, companies come into Nigeria just to infringe on our tax laws by indulging in tax evasion. There is no doubt that broadcasting, telecommunications, and the cable-satellite industries have changed the face of communication in Nigeria.

“However, when it comes to tax compliance, some companies are found wanting. They do with impunity in Nigeria what they dare not try in their countries of origin.”
FIRS claimed Nigeria contributes 34 per cent of total revenue for the MultiChoice group followed by Kenya with 11 per cent and Zambia with 10 per cent.
But the rest of Africa where they have a presence accounts for 45 per cent of the group’s total revenue.

Nami said information currently at the disposal of FIRS revealed a tax liability of N1.822 trillion for years of assessment, including $342.53 million.

“Under the FIRS powers in Section 49 of the Companies Income Tax Act Cap C21 LFN 2004 as amended, Section 41 of the Value Added Tax Act Cap V1 LFN 2004 as amended and Section 31 of the FIRS (Establishment) Act No. 13 of 2007, all bankers to MCA and MCN in Nigeria were therefore appointed as collecting agents for the full recovery of the aforesaid tax debt,” he stated.

He added that the banks are required to sweep balances in each of the above-mentioned entities’ accounts and pay the same in full or part settlement of the companies’ respective tax debts until full recovery.

“This should be done before the execution of any transaction involving the companies or any of their subsidiaries. It is further requested that the Federal Inland Revenue Service be informed of any transactions before execution on the account, especially transfers of funds to any of their subsidiaries,” he added.