The Federal Government through the Federal Inland Revenue Service (FIRS) has ordered banks to freeze all accounts of Messrs MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA) in Nigeria due to the tax of N1.8 trillion it owes the government.
This order to the banks is contained in a statement by the executive chairman of FIRS, Muhammad Nami, stating that Multichoice 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,” Nami said.
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 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” Nami stated.
The chairman stated that Nigeria contributed 34 per cent of total revenue for the Multi-Choice group saying that the next to Nigeria from intelligence gathering 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 ₦1.8trillion and 342.5 million dollars.
“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.
“We 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.
The service also said it discovered that the companies persistently breached all agreements and undertakings with the Service.
The FIRS chairman observed that 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).
He said companies come to Nigeria just to infringe on 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.