Just like MTN debt tussle with the Federal Government of Nigeria in recent times, another South African firm operational in Nigeria may be in for another long round of dispute, this time with the tax administration. Management of South African owned communication group, Multichoice will now brace up as the Federal Inland Revenue Service is set to clamp down on its financial flow due to tax backlogs.

Taxmobile.online reached the above conjecture as Muhammad Nami, chairman of the Federal Inland Revenue Service, FIRS on Thursday 8th July 2021 announced the appointment of some commercial banks as agents to recover the sum of ₦1.82 trillion for relevant years of assessment including $342.53 million by feezing accounts of Messrs Multi-Choice Nigeria Limited (MCN) and Multi-Choice Africa (MCA) operators of DSTV and GOTV.

The stringent move according to the government agency came on the heels of the group’s continued refusal to grant FIRS access to its servers for audit, violation of operational agreements, refusal of FIRS to access records, suspicion of tax frauds, refusal to grant FIRS accurate numbers of subscribers and income among other irregularities shortchanging the government of required funds to finance operation.

In another damning revelation, MultiChoice Nigeria has been accused of under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company with a pointer that the group’s performance did not reflect in its tax obligations and compliance level in Nigeria.

The thriving south African-owned firm has been accused of fraudulent tax activities which include data integrity issues, prompt response to correspondences, shrouding records in secrecy.

Check below the exact statement as issued by Director, Communications and Liaison Department, FIRS, Abdullahi Ahmad, said Multi-choice

”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.

“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).

“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.”

Legal rationale

The FIRS in taking this decision is standing on the legal provisions of 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.

These provisions grant all bankers to MCA and MCN in Nigeria the role of collecting Agents for the full recovery of the aforesaid tax debt which enables the affected banks required capacity 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 by the law 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.

Threats for MultiChoice

According to the FIRS, Nigeria contributes 34 percent of total revenue for the MultiChoice group followed by Kenya with 11 percent and Zambia with 10 percent. The rest of Africa where they have presence accounts for 45 percent of the group’s total revenue.

The above data is a clear indication that the Management of MultiChoice Nigeria will strongly want to avoid prolonged tussles as a huge chunk of its viewers, hence revenue comes from Nigeria.

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