Some commercial banks have been appointed as agents by the Federal Inland Revenue Service (FIRS) to recover the sum of N1.8trn from accounts of MultiChoice Nigeria Limited (MCN) And MultiChoice Africa (MCA).
This was contained in a statement signed by Muhammad Nami, the Executive Chairman of the FIRS and released on Thursday.
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, the statement confirmed.
The companies, it was discovered, persistently breached all agreements and undertakings with the FIRS.
According to the FIRS, the companies have failed to promptly respond to correspondences, they lack data integrity and are not transparent as they continually deny FIRS access to their records.
MCN has avoided giving the FIRS accurate information on the number of its subscribers and income, the Service stated.
The statement added:
The companies are involved in the under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company.
The statement explained further that the group’s performance does not reflect in its tax obligations and compliance level in Nigeria.
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It added:
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 Federal Inland Revenue Service (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 statement further confirmed that Nigeria contributes 34 per cent of total revenue for the Multi-Choice group.
The next to Nigeria from intelligence gathering is Kenya with 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.
Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for ₦1,822,923,909,313.94 and $342,531,206.
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.
The statement added:
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.
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.
He said:
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.
