MultiChoice explains debt position as tribunal orders payment of N900b tax backlog

MultiChoice Nigeria has said the directive issued by the Tax Appeal Tribunal (TAT) does not compel it to make payment of 50 per cent of N1.8 trillion, being half of the disputed tax assessment, which is under appeal.

Rather, MultiChoice, owners of cable television services, DStv and GOtv, explained in a statement yesterday, that the directive issued by TAT, in accordance with paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (FIRS) Establishment Act, requires it (MultiChoice Nigeria) to deposit with FIRS an amount equal to the tax paid by MultiChoice Nigeria in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10 per cent.

The South Africa-owned firm, which claimed to be a law-abiding corporate citizen and would continue to engage constructively with FIRS in an attempt to resolve this matter, said the lesser amount is the tax paid by it (MultiChoice Nigeria) in the previous assessed year, which is substantially less than the disputed assessment.

The statement reads: “MultiChoice Nigeria has noted today’s media statement on the Tax Appeal Tribunal appeal hearing held on August 24, 2021.

“The direction issued by the TAT does not compel MultiChoice Nigeria to make payment of 50 per cent of N1.8 trillion, being half of the disputed tax assessment, which is under appeal.

“The direction issued by the TAT in accordance with paragraph 15(7) of the Fifth Schedule to the FIRS Establishment Act requires MultiChoice Nigeria to deposit with FIRS an amount equal to the tax paid by MultiChoice Nigeria in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10 per cent. The lesser amount is the tax paid by MultiChoice Nigeria in the previous assessed year, which is substantially less than the disputed assessment.

“MultiChoice Nigeria is a law-abiding corporate citizen and continues to engage constructively with FIRS in an attempt to resolve this matter.”

A TAT sitting in Lagos had earlier, yesterday, ordered MultiChoice Nigeria Limited to pay 50 per cent of N1.8 trillion tax backlog to the FIRS.

Director, Communications and Liaison Department of the FIRS, Abdullahi Ahmad, made this known in a statement in Abuja.

Ahmad explained that FIRS discovered the backlog through a forensic audit, which allegedly showed that MultiChoice Nigeria Limited failed to pay to the government of Nigeria in past assessment years.

He said the five-member TAT, led by its chairman, Prof. A. B. Ahmed, issued the order following an application to it by the counsel to FIRS.

He stated that the counsel made the application under Order XI of the TAT Procedure Rules 2010, which requires MultiChoice or any other 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).

According to him, 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 April 7, 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.

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 make the statutory deposit of 50 per cent of the disputed sum.

“After hearing arguments from both sides, TAT upheld the FIRS Act and directed MultiChoice Nigeria Limited to deposit with the FIRS the amount prescribed by the law, which is an amount equal to the tax charged upon MultiChoice in the preceding year of assessment.

“Or one half of the tax charged by the assessment under appeal (whichever is lesser), plus a sum equal to 10 per cent of the said deposit as a condition precedent for further hearing of the appeal.

“Thereafter, TAT adjourned the Appeal to September 23, 2021 for continuation of the hearing, subject to compliance with the Tribunal’s order,” he said.