The Tax Appeal Tribunal (TAT) on Tuesday order Multichoice Nigeria Limited, owners of Nigeria’s leading pay cable TV service provider, DSTV, to deposit about N990billion with the court before its appeal is heard.
The money represents 50 percent of N1.8 trillion the Federal Inland Revenue Service (FIRS) said the company was owing for alleged serial violation of the country’s tax regulations since it commenced operations in Nigeria.
The money also include 10 percent of the deposit as a condition precedent for further Hearing of the Appeal.
In July this year, the FIRS appointed all commercial banks in the country as agents to help recover the huge tax debt from accounts belonging MultiChoice Nigeria Limited (MCN), and its parent ompany, MultiChoice Africa (MCA).
The Chairman of FIRS, Muhammad Nami, who announced the appointment of the banks as collection agents said the banks were mandated to freeze the accounts of these two companies for the alleged tax violations.
He said the powers of the Service to issue the order were derived from the provisions of 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.
The Chairman said the FIRS discovered discovered that the two companies persistently breached all agreements and undertakings with it, by not responding promptly to all correspondences to them relating to tax matters.
He said the two companies also lacked data integrity and transparency in the handling of such tax matters, as they continually deny FIRS access to their tax records.
However, Nami said the decision to appoint the banks as agents, with the directive for them to freeze the accounts, was as a result of the companies’ continued refusal to grant FIRS access to its servers to audit its operations.
He said throughout the years of their operations in Nigeria, MultiChoice Africa has never paid Value Added Tax (VAT) since its inception.
The FIRS Chairman put the cumulative tax liability of Multichoice Nigeria and Multichoice Africa based on relevant years of assessment at about ₦1.823 trillion and $342.53 million.
Following the account freezing order, the management of MultiChoice Nigeria Limited (MCN) vehemently rejected FIRS tax liability claims, accusing the tax agency of not giving it any notification about these allegations
While confirming they in discussion with FIRS over their concerns, Multichoice gave assurance of. An amicable resolution.
The company later filed an application before the tax appeal Tribunal to formally object FIRS allegations.
However, when the application came up for hearing on Tuesday in Lagos, the five-member TAT panel led by its Chairman, A.B. Ahmed, a professor, ordered Multichoice Nigeria to deposit 50 percent of the total outstanding liability standing against it before the Appeal was heard.
The order followed an application by the Counsel to FIRS, who said that the amount reported against the two companies were arrived at following a forensic audit, which revealed that Multichoice Nigeria Limited failed to pay the Nigerian government as taxes in past assessment years.
The FIRS lawyer told the Tribunal the application came under Order XI of the TAT Procedure Rules 2010, which enables a party to make an application at any stage of the proceedings.
The lawyer drew the attention of the Tribunal to Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007.
He urged the Tribunal to direct Multichoice Nigeria Limited to deposit with the FIRS through the court 50 percent of the amount of the Assessment under Appeal as security and a condition that must be fulfilled before the prosecution of the Appeal brought before the tribunal.
In certain defined circumstances to which the Multichoice appeal fits, the lawyer cited Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act), which requires persons or companies seeking to contest a tax assessment to pay all or a stipulated percentage of the tax assessed before they could be allowed to argue their appeal contesting the assessment at TAT.
At Tuesday’s hearing of the matter in Appeal No: TAT/LZ/CIT/062/2021 19/08/2021 (Multichoice Nigeria Limited v. Federal Inland Revenue Service), Multichoice Nigeria Limited amended its Notice of Appeal and thereafter sought through its counsel, Bidemi Olumide of AO2 Law Firm for an adjournment of the proceedings to enable it to respond to the FIRS’ formal application for Accelerated hearing of the Appeal.
Also, the FIRS has requested the Tribunal to direct Multichoice to produce before it the integrated Annual report and Management Account Statements of Multichoice Group Ltd for Tax Years 2012 to 2020., among other prayers.
In response, however, the FIRS Counsel asked TAT to issue an order requiring that Multichoice madd the statutory deposit of 50 percent of the disputed sum.
After hearing arguments from both sides, the tribunal upheld the FIRS submission and directed Multichoice Nigeria Limited to deposit with the FIRS an amount equals 50 percent of the Assessment under the Appeal, in addition to a sum equal to 10 percent of the said deposit as a condition precedent for further Hearing of the Appeal.
The Tribunal adjourned hearing on the Appeal to September 23, 2021 for report of compliance with its Order and continuation of the hearing, subject to compliance with the Tribunal’s order.