FIRS appoints banks to recover N1.8trn $342.531M taxes from Multichoice Company

The Federal Inland Revenue Service (FIRS) has directed banks to freeze all accounts of Messrs MultiChoice Nigeria Limited (MCN) And MultiChoice Africa (MCA) in Nigeria and to help it recover the sum of N1.8 trillion suspected to be taxes the company is owing to the Nigerian Government.

The action by the FIRS is an attempt to block revenue leakage in the country and also stem the tide of illegal financial flows from the country put at about N6.87 trillion annually by multinationals operating in Nigeria in the year 2015 by the former South African President, Thambo Mbeki’s African Union Committee’s Report on illegal flows from Africa.

The directives to the banks is contained in a statement by the executive chairman of FIRS, Muhammad Nami.
The FIRS Chairman claimed 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 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,” he said. “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% of total revenue for the Multichoice group. The next to Nigeria from intelligence gathering is Kenya with 11%, and Zambia is in 3rd place with 10%. The rest of Africa where they have presence accounts for 45% of the group’s total revenue.

Nami said 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 on the part of Multichoice.

“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,” Nami said.

“ 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 FIRS Chairman further instructed the banks.

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. 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.