Tax compliance, audit: FIRS tackles Multichoice Nigeria, parent over N1.8tr debt

Orders banks to freeze, recover debt till full liabilities are settled.

MEDIATRACNET

The Federal Inland Revenue Service (FIRS) has appointed all commercial banks in the country as agents to recover about N1.8 trillion from accounts belonging Nigeria’s pay TV service provider, MultiChoice Nigeria Limited (MCN), and its parent ompany, MultiChoice Africa (MCA) for serial violation of the country’s regulations.
The Chairman of FIRS, Muhammad Nami, who announced the appointment of the banks said they were mandated to freeze the accounts of these two companies for the alleged violations.
He did not disclose the names of the banks.
Under FIRS powers conferred by 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, all bankers to MCA & MCN in Nigeria were therefore appointed as Collecting Agents for the full recovery of the aforesaid tax debt.
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 .
The Chairman said the FIRS discovered that the two companies persistently breached all agreements and undertakings with the tax agency, 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 matters, as they continually deny FIRS access to their tax records. “Particularly, Multichoice Nigeria has avoided giving the FIRS accurate information on the number of its subscribers and income.
“The companies are involved in the under-remittance of taxes, which necessitated a critical review of their tax-compliance levels,” the FIRS Chairman said.
Besides, he said “the Group’s performance does not reflect in its tax obligations and compliance level in Nigeria.
“The level of non-compliance by Multi-Choice Africa (MCA), the parent Company of Multi-Choice Nigeria (MCN) is very alarming.
“The parent company, which provides services to MCN has never paid Value Added Tax (VAT) since its inception,” he said.
The issue with tax collection in Nigeria, especially from foreign-based companies conducting businesses in Nigeria and making massive profits, he noted, was frustrating and infuriating to the Federal Inland Revenue Service (FIRS).
Nami expressed regrets that companies come into Nigeria just to infringe on the country’s tax laws by indulging in tax evasion.
Although he said broadcasting, telecommunications and the cable-satellite industries have changed the face of communication in Nigeria, Nami lamented that they have not faired well when it comes to tax compliance, as some companies are found wanting.
“They do with impunity in Nigeria what they dare not try in their countries of origin,” Nami said.
With Nigeria contributing about 34 percent of total revenue for the Multi-Choice group, he said only Kenya comes next with 11 percent, with intelligence gathering, and Zambia in third place with 10 percent.
The rest of Africa, he said, where they have presence accounts for 45 percent of the group’s total revenue. The FIRS Chairman said information currently at the disposal of tax service showed a tax liability standing against Multichoice Nigeria and Multichoice Africa for relevant years of assessment totalling ₦1. 823 trillion and $342.53 million.
Consequently, the FIRS Chairman said all commercial banks in the country are expected to sweep the balances in all the accounts belonging to the two companies and pay same in full or part settlement of their respective tax debts until FULL recovery.
Nami said this should be done before the execution of any transaction involving the companies or any of their subsidiaries.
He said the banks are further directed to ensure that the FIRS is promptly informed of any transactions involving the two companies before EXECUTION on the account, especially transfers of funds to any of their subsidiaries.
“It is important that Nigeria puts a stop to all tax frauds that have been going on for too long.  All Companies must be held accountable and made to pay their fair share of relevant taxes, including back duty taxes owed, especially VAT for which they are ordinarily agents of Collection,” the FiRS Chairman.
At the time of filing this report, MEDIATRACNET was awaiting the reaction of Multichoice Nigeria on this development.

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