On Thursday, the federal government of Nigeria said it has begun moves to freeze members of Multichoice Group’s bank accounts over N1.8 trillion tax debt.
Members of Multichoice Group involved are, MultiChoice Nigeria Limited (MCN) And MultiChoice Africa (MCA). Nigeria’s tax authority, the Federal Inland Revenue Service (FIRS) said it had engaged banks as agents to freeze and recover N1.8 trillion from their respective accounts.
Abdullahi Ahmad, Director, Communications and Liaison Department of FIRS, made this known in Abuja on Thursday through a statement issued by the FIRS.
The tax body disclosed that the decision to appoint the banks as agents and freeze the accounts was due to MultiChoice’s continued refusal to grant FIRS access to their servers for audit.
According to the agency, the companies persistently breached all agreements and undertakings.
“The companies would not promptly respond to correspondence. 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.”
The FIRS added that the groups’ performance did not reflect their tax obligations and compliance level in the country.
The FIRS further noted that the level of non-compliance by Multichoice Africa (MCA), the parent Company MCN, was very alarming, adding that the parent company, which provided services to MCN, had not paid Value Added Tax (VAT) since its inception.
It said, “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 chairman stated that Nigeria contributed 34 per cent of total revenue for the Multi-Choice group.
According to him, other African countries they have a 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. FIRS is powered 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,” disclosed Mr Nami.
He 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 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.”
In response, MCN said it has not received any notification from the FIRS, and it is willing to cooperate with the tax body, yielding to its demand of transparency.
However, the development makes Multichoice the second South African company caught in the web of Nigeria’s tax authorities. Telecom giant, MTN was in 2018, caught in a $2 billion tax evasion scandal. Though the largest telco in Nigeria found a way out of the hook, the incident stirred the government’s eagerness to close tax loopholes, especially from multinational companies.
Nigeria’s tax to GDP ratio has seen a decade of drastic decline, reaching 6.1% as of July 2020, among the lowest in the world. FIRS’ move on Multichoice signals the government’s determination to close Nigeria’s tax loose ends, particularly in the face of an economic downturn orchestrated by the decline in oil revenue.