The Federal Inland Revenue Service (FIRS) said some commercial banks have been appointed as agents to freeze the account of MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA), owners of cable television service provider, DSTV and recover N1.8 trillion Value Added Tax (VAT) owed Nigeria.
A statement signed by the Executive Chairman of FIRS, Muhammad Nami said the move became necessary because MultiChoice has never paid VAT since its inception in the country.
Nami said that the decision to appoint banks as agents and to freeze the accounts was as a result of the group’s continued refusal to grant FIRS access to its servers for audit.
“It was discovered that the companies persistently breached all agreements and undertakings with the Service. They 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.
“The 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 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.
“Nigeria contributes 34% of total revenue for the Multi-Choice 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.
“Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for ₦1,822,923,909,313.94 (One trillion, eight hundred and twenty-two billion, nine hundred and twenty-three million, nine hundred and nine thousand, three hundred and thirteen naira, ninety-four kobo only) and $342,531,206 (Three hundred and forty-two million, five hundred and thirty-one thousand, two hundred and six dollars only).
“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.
“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,” Nami said.