The tax rift between the Federal Inland Revenue Service (FIRS) and Multichoice Nigeria Limited took a new turn on Wednesday following a court ruling ordering the TV company to pay N900 billion to the tax agency, which is 50% of the backlog of what it allegedly owes in taxes.
The FIRS had accused Multichoice of owing up to N1.8 trillion in taxes after the tax body said it conducted a forensic audit which revealed that the company had failed to fully fulfill its civic responsibility in the assessed years. NAN reports that five-member Tax Appeal Tribunal (TAT) sitting in Lagos issued the order following an application to it by the counsel to FIRS. TAT led by its Chairman, A.B. Ahmed, issued the order following the application.
The FIRS Counsel made the application under Order XI of the TAT Procedure Rules 2010 which enables a party to make an application at any stage of the proceedings.
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Counsel for FIRS drew the attention of the Tribunal to Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 and urge the tribunal to direct Multichoice to deposit with the FIRS 50 per cent of the amount of the assessment under appeal as security. It is a requirement for any taxpayer who disputes their tax assessments, to make the statutory deposit required under Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act).
Director, Communications and Liaison Department, FIRS, Dr. Abdullahi Ismaila Ahmad issued a statement on Wednesday after the court’s decision. He said these relevant laws are conditions that must be fulfilled before the prosecution of the appeal brought before TAT.
“In certain defined circumstances to which the Multichoice appeal fits, paragraph 15(7) of the fifth schedule to the FIRS (Establishment) Act 2007 requires persons or companies seeking to contest a tax assessment to pay all or a stipulated percentage of the tax assessed before they can be allowed to argue their appeal contesting the assessment at TAT.
“Multichoice Nigeria Limited filed the matter at the Lagos TAT following its dispute over FIRS’ issuance of Notices of Assessment and Demand Note in the sum of N1,822,923,909,313.94k on 7 April 2021.
“The amount constitutes what the FIRS calculated as due in taxation to the Federal Government of Nigeria from Multichoice after an investigation over several months to determine the extent to which Multichoice has been evading taxes in Nigeria,” he explained.
Multichoice had filed the matter at the Lagos TAT following its dispute over FIRS’ issuance of Notices of Assessment and Demand Note in the sum of N1.82 trillion on 7 April 7, 2021.
The amount constitutes what the FIRS calculated as due in taxation to the federal government from the company after an investigation over several months to determine the extent to which Multichoice had been evading taxes in Nigeria.
Mr Ahmad noted that at Tuesday’s hearing of the matter in Appeal, Multichoice Nigeria Limited amended its Notice of Appeal and thereafter sought through its Counsel, Bidemi Olumide of AO2 Law Firm, for an adjournment of the proceedings to enable it to respond to the FIRS’ formal application for accelerated hearing of the appeal.
“In response, the FIRS Counsel asked TAT to issue an order requiring that Multichoice makes the statutory deposit of 50 per cent of the disputed sum.
“The counsel also prayed TAT to direct Multichoice to produce before the Tribunal the integrated Annual Report and Management Account Statements of Multichoice Group Ltd for Tax Years 2012 to 2020, among other prayers,” he explained.
After hearing arguments from both sides, TAT upheld the FIRS submission and directed Multichoice to deposit with the FIRS an amount equal to 50 percent of the Assessment under the Appeal plus a sum equal to 10 percent of the said deposit as a condition precedent for further hearing of the appeal.
The appeal was adjourned to September 23, 2021 for report of compliance with its order and continuation of the hearing, subject to compliance with the tribunal’s order.
The legal tussle is one of the biggest tax cases Nigeria has ever recorded, and it shows how serious the government is taking tax evasion especially by multinationals. In the face of dwindling oil revenue, the Nigerian government has seen taxation as alternate means of revenue generation and has upped its assessment pattern. Multichoice, which has other cases such as the push for it to implement a pay-per-view pricing model, to settle with the government, will face existential crisis in Nigeria if it loses this case.