Tax evasion: Tribunal orders Multichoice to pay N900 tax backlog to FIRS

A Tax Appeal Tribunal (TAT) sitting in Lagos has ordered Multichoice Nigeria Limited, owners of cable television services, DSTV and Gotv, to pay 50% of N1.8 trillion tax backlog to the Federal Inland Revenue Service (FIRS).

The 5-member TAT, led by its Chairman, Prof. A.B. Ahmed, issued an order for Multichoice to make the N900 billion tax backlog payment, following an application to it by the counsel to FIRS.

This disclosure was contained in a statement issued by the Director, Communications and Liaison Department of the FIRS, Mr Abdullahi Ahmad, in Abuja on Wednesday.

Ahmad explained that FIRS discovered the backlog through a forensic audit, as it allegedly showed that Multichoice Nigeria Limited had failed to pay to the Government of Nigeria in past assessment years.

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What the Director of FIRS said in the statement

Ahmad 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).

He said that these relevant laws are conditions that must be fulfilled before the prosecution of the appeal brought before TAT.

The FIRS Director said, “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 7 April, 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.’’

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.

He said, “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.

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

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

What you should know

It can be recalled that in July 2021, the FIRS had appointed some commercial banks as agents to recover N1.8 trillion from accounts of MultiChoice Nigeria Limited (MCN) And MultiChoice Africa (MCA).

Muhammad Nami, FIRS chairman, said the decision to appoint the banks as agents and to freeze the accounts resulted from the group’s continued refusal to grant FIRS access to its servers for audit.

The FIRS said it determined through a forensic audit that Multichoice Nigeria Limited had failed to pay to the federal government of Nigeria taxes worth N1.8 trillion.

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In its reaction, Multichoice assured that it would work with FIRS to prove its tax compliance.