N1.8trn Debt: FIRS Moves Against DSTV, MultiChoice Accounts

• Appoints banks to recover outstanding taxes
• Slams foreign firms over tax non-compliance, impunity

BY COBHAM NSA – For their alleged under-remittances and non-compliance with tax obligations, Messrs Multi-Choice Nigeria Limited (MCN) and Multi-Choice Africa (MCA) are swimming in stormy waters as the Federal Inland Revenue Service (FIRS) moves to recover a whopping N1.8 trillion outstanding taxes from the two outfits.

Consequently, FIRS has appointed some commercial banks as agents to freeze both companies’ accounts until full recovery of the debts is achieved.

Executive Chairman of the Service, Muhammad Nami said the designated “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”, Nami said.

The FIRS Chairman said in a signed statement on Thursday that the decision was taken due to the “group’s continued refusal to grant FIRS access to its servers for audit.”

He accused them of persistently breaching “all agreements and undertakings with the Service”, adding; “they would not promptly respond to correspondences, they lack 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.”

Specifically, the FIRS Chief Executive 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.”

The FIRS said this unacceptable behavior is despite the fact that Nigeria contributes about 34 percent of total revenue for the Multi-Choice group, noting that next to Nigeria from intelligence gathering is Kenya with just about 11 percent, and Zambia is in 3rd place with 10 percent contribution.

Also confirming that the rest of Africa where the companies have presence accounts for 45 percent of their total revenue, the FIRS said available information puts Multi-Choice group’s tax liability for relevant years of assessment at “₦1,822,923,909,313.94 (One trillion, eight hundred and twenty-two billion, nine hundred and twenty-three million, nine hundred and nine thousand, three hundred and thirteen Naira, ninety-four kobo only) and $342,531,206 (Three hundred and forty-two million, five hundred and thirty-one thousand, two hundred and six dollars only).”

The statement explained that “under 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 & MCN in Nigeria were therefore appointed as Collecting Agents for the full recovery of the aforesaid tax debt.”

Nami assured that FIRS is determined to ensure Nigeria puts a stop to all tax frauds that have been going on for too long, insisting that “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.”

Describing as “frustrating and infuriating” the issue of tax collection, especially from foreign-based companies conducting businesses in Nigeria and making massive profits, Nami said; “Regrettably, Companies come into Nigeria just to infringe on our tax laws by indulging in tax evasion.”

According to him; “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.”