FIRS directs banks to deduct N1.8trn from accounts of Multichoice over ‘tax evasion’

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

Muhammad Nami, FIRS chairman, said the decision to appoint the banks as agents and to freeze the accounts was as a result of the group’s continued refusal to grant FIRS access to its servers for audit.

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

Nami said the FIRS discovered that the companies persistently breached all agreements and undertakings with the service.

He explained that the companies failed to promptly respond to correspondences, and further described them as lacking in data integrity and transparency 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,” a statement by Abdullahi Ahmad, FIRS director of communications and liaison department, quoted Nami to have said.

The statement added that 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 chairman said that Nigeria contributes 34 percent of total revenue for the Multi-Choice group, adding that the next to Nigeria from intelligence gathering is Kenya with 11 percent and Zambia in third place with 10 percent.

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

“Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for N1.82 trillion and $342.5 million,” he said.

“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.

“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 Federal Inland Revenue Service be informed of any transactions before EXECUTION on the account, especially transfers of funds to any of their subsidiaries.”

Nami noted that it was important that Nigeria puts a stop to all tax frauds that have been going on for too long.

He added 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.