Tax Evasion: FG to freeze MultiChoice Accounts

The Federal Inland Revenue Service (FIRS) has engaged some commercial banks as agents to freeze and recover N1.8 trillion from accounts of MultiChoice Nigeria Limited And MultiChoice Africa.

This is contained in a statement issued by Abdullahi Ahmad, Director, Communications and Liaison Department of FIRS in Abuja on Thursday.

Multichoice is the owner of the satellite television, DSTV, a popular subscription-based platform in Nigeria.

The FIRS explained that the decision to appoint the banks as agents and to freeze the accounts was as a result of the groups’ continued refusal to grant FIRS access to their servers for audit.

The service said it discovered that the companies persistently breached all agreements and undertakings with the Service.

The Executive Chairman FIRS, Muhammad Nami, was quoted as saying, “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,” Mr Nami stated.

The service added that the groups’ performance did not reflect in their tax obligations and compliance level in the country.

The FIRS further noted that the level of non-compliance by Multi-Choice Africa (MCA), the parent Company 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,” he said.

The chairman stated that Nigeria contributed 34 per cent of total revenue for the Multi-Choice group, and the next to Nigeria is Kenya with 11 per cent and Zambia in third place with 10 per cent.

According to him, the rest African countries where they have presence account for 45 per cent of the group’s total revenue.

“Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for ₦1.8 trillion and 342.5 million dollars.

“FIRS is empowered 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.

“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,” he said.

Meanwhile, Multichoice said it has complied with Nigerian tax laws and will prove that to the Federal Inland Revenue Service, which accused the South African digital television company of tax fraud.

The company said this in a statement Thursday after the FIRS said the DSTV owner had dodged tax and had an outstanding of N1.8 trillion.

The tax body said it has engaged commercial banks to freeze and recover the amount from the bank accounts of MultiChoice Nigeria Limited and MultiChoice Africa.

The Executive Chairman of FIRS, Muhammad Nami, said Multichoice and its unit in Nigeria consistently failed to promptly respond to correspondences, lack data integrity and continually deny FIRS access to their records.

“Particularly, MCN has avoided giving the FIRS accurate information on the number of its subscribers and income,” he said.

“The companies are involved in the under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company.

”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,” he said.

In a short statement Thursday, Bamidele Johnson, a representative of Multichoice, said the company had complied with the tax laws of Nigeria. He said the company had not received any notification from the tax office.

“We have read the media reports and the statements made by the Federal Inland Revenue Service (FIRS),” the statement said.

 “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.”

Credit: NAN

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