For refusing access to its servers for a tax audit, the Federal Inland Revenue Service (FIRS) has ordered commercial banks that are bankers to Messrs MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA) to freeze and recover a total sum of N1.8 trillion from the digital television streaming accounts
Tax liability of the companies for the relevant years of assessment according to FIRS findings is in the range of ₦1,822,923,909,313.94 and $342,531,206 .
The FIRS is relying on its 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, asking all bankers to MCA & MCN in Nigeria to sweep the 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 is expected to 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.
The Executive Chairman FIRS, Muhammad Nami said the agency resorted to this following the companies persistent breach of all agreements and undertakings with the Service.
“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’ noted Nami in a statement.
Nami noted that the group’s performance does not reflect in its tax obligations and compliance level in Nigeria, pointing out that 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” stated the FIRS Chairman.
The issue with Tax collection in Nigeria, especially from foreign-based Companies conducting businesses in Nigeria and making massive profits has frustrated the Federal Inland Revenue Service (FIRS). Regrettably, Companies come into Nigeria to infringe on the country’s 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 but many of the foreign firms are found wanting when it comes to tax compliance.
Nigerian subscribers contribute 34 per cent of total revenue for the Multi-Choice group with Kenya contributing 11 per cent, and Zambia is in 3rd place with 10 per cent. The rest of Africa where they have presence accounts for 45 per cent of the group’s total revenue.
The Executive Chairman, FIRS concluded that 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.
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