The Federal Inland Revenue Service (FIRS) has appointed Nigerian Deposit Money Banks as agents to freeze and recover the sum of N1.8 trillion from accounts of Messrs MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA).
But the cable television service provider in a swift reaction, debunked claims that it defaulted in tax payment to the tune of N1.8 trillion.
Executive Chairman of the agency, Muhammad Nami, explained in a statement, yesterday, that the decision to appoint the banks as agents and to freeze the accounts was a result of the group’s under-remittance of taxes and continued refusal to grant FIRS access to its servers for audit.
He said: “It was discovered that the companies persistently breached 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.”
Noting that the group’s performance does not reflect in its tax obligations and compliance level in Nigeria, Nami said: “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 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 boss also noted that Nigeria contributes 34% of total revenue for the Multi-Choice group, adding that the next to Nigeria from intelligence gathering was Kenya with 11%, and Zambia in 3rd place with 10%.
According to him, the rest of Africa where the company has presence accounts for 45% of its total revenue.
“Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for N1,822,923,909,313.94 and $342,531,206 only.
“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 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.’’
Meanwhile, Multichoice Nigeria has debunked claims that it defaulted in tax payment to the tune of N1.8 trillion as claimed by the FIRS.
The pay television operator, however, said that, while it denies the liability as claimed by FIRS, it was not also ready to engage the institution in war of words or media brawl, but will find peaceful and better means of resolving the misunderstanding, should FIRS bring the issue to its notice.
It claimed that as at the time of filing this story, FIRS has not officially notified it of such humongous liability and plans to appoint banks to recover it.
MultiChoice said in a statement: “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. We respect and are comfortable that we comply 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”.
However, a source at the company said that FIRS might have made very serious computational errors leading to why it contemplated the company could owe such humongous sum in tax debt.
He said: “FIRS is government and you know that no serious business concern would want to engage government in a fight. We do not even want to engage it in any media brawl, but what we know is that someone somewhere in FIRS has made an embarrassing error, which we would amicably resolve with the agency.
“I mean, if you look at the amount, it is quoting to be owed and what MultiChoice pays as tax, you will find that even if we have not paid anything for several years, we still would not owe up to that. By the way, is tax not derived from profit? If MultiChoice owes as much as that, how much is the gain we make on annual basis?
“So if you look at it critically, it does not add up. Assuming, without conceding the fact that MultiChoice owes that outrageous amount, there are very clean processes of drawing debt than the manner this one is playing out. Unless there are other issues some people want to get at through this, the N1.8trn tax thing doesn’t add up at all. But like I have told you, MultiChoice will resolve the issue amicably with FIRS.”