N1.8 Trillion Tax Breach: FIRS Orders Freezing Of Multichoice Accounts 

Multichoice shares crash as FIRS asks commercial banks to recover N1.8trn  in unpaid taxes | International Centre for Investigative Reporting

Yemisi Izuora

The Federal Inland Revenue Service (FIRS) has directed banks in which MultiChoice accounts are domiciled  to freeze and recover N1.8 trillion from such accounts of the companies.

The firms are MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA).

In a statement by Mr Abdullahi Ahmad, Director, Communications and Liaison Department of FIRS in Abuja, the Agency said that the decision to appoint the banks as agents and to freeze the accounts arose from the companies’ continued refusal to grant FIRS access to their servers for audit.

The FIRS said that it had discovered that the MultiChoice firms persistently breached all agreements and undertakings with the Service.

“Information currently at the disposal of FIRS has shown a tax liability for relevant years of assessment for ₦1.8 trillion and $342.5 million. FIRS is empowered by 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. With these relevant sections, all bankers to MCA and MCN in Nigeria are therefore appointed as Collecting Agents for the full recovery of the aforesaid tax debt.

“In this regard, the affected 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 FIRS be informed of any transactions 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 had been going on for too long and all companies must be held accountable and made to pay their fair share of relevant taxes including back duty taxes owed especially VAT.”

On efforts of FIRS to communicate with the company, it said, “The companies would not promptly respond to correspondences, they lacked data integrity and are not transparent as they continually deny FIRS access to their records. Particularly, MCN 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 the tax-compliance level of the company.” FIRS added that the groups’ performance did not reflect in their tax obligations and compliance level in the country. It further said that the level of non-compliance by Multi-Choice Africa (MCA), the parent Company of MCN was very alarming adding that the parent company, which provided services to MCN had 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 profits is frustrating and infuriating to the 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,” the FIRS said. The Chairman stated that Nigeria contributed 34% of total revenue for the MultiChoice Group saying that the next to Nigeria from intelligence gathering is Kenya with 11% and Zambia in third place with 10%.

According to him, the remaining African countries where they have a presence account for 45% of the Group’s total revenue. The spokesperson of MultiChoice Nigeria, Carol Oghuma, said that the company has not received any notification from FIRS, adding that MultiChoice Nigeria respects and is comfortable that it complies with the tax laws of Nigeria. She said “We have read the media reports and the statements made by the Federal Inland Revenue Service (FIRS). MultiChoice Nigeria has not received any notification from FIRS. “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.”

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