Nigeria Accuses South Africa’s MultiChoice of $4.36bn Tax Fraud, Moves to Freeze Accounts

The Nigerian government has moved to freeze and recover N1.8 trillion, some $4.36bn from accounts of South African companies, MultiChoice Nigeria Limited and MultiChoice Africa.

The country’s Federal Inland Revenue Service (FIRS) says it has engaged some commercial banks as agents to carry out the exercise.

Abdullahi Ahmad, Director of Communications and Liaison Department of FIRS in a statement on Thursday explained that the decision to appoint the banks as agents and the decision to freeze the accounts was as a result of the groups’ continued refusal to grant FIRS access to their servers for audit.

Multichoice is the owner of the satellite television, DSTV, a popular subscription-based platform in Nigeria.

The service said it discovered that the companies persistently breached all agreements and undertakings with the Service.

FIRS Executive Chairman, Muhammad Nami, was quoted as saying, “the companies 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,” Mr Nami stated.

The service added that the groups’ performance did not reflect in their tax obligations and compliance level in the country.

The FIRS further noted that the level of non-compliance by Multi-Choice Africa (MCA), the parent Company MCN was very alarming adding that the parent company, which provided services to MCN had 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 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. They do with impunity in Nigeria what they dare not try in their countries of origin,” he said.

The chairman stated that Nigeria contributed 34 per cent of total revenue for the Multi-Choice group, and the next to Nigeria is Kenya with 11 per cent and Zambia in third place with 10 per cent.

According to Mr Nami, the rest of the African countries where Multichoice has presence account for 45 per cent of the group’s total revenue.

“Information currently at the disposal of FIRS has revealed a tax liability for relevant years of assessment for ₦1.8 trillion and 342.5 million dollars.

“FIRS is empowered 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.

“With these relevant sections all bankers to MCA and MCN in Nigeria are 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 FIRS be informed of any transactions before execution on the account, especially transfers of funds to any of their subsidiaries.

”It is important that Nigeria puts a stop to all tax frauds that had been going on for too long and all companies must be held accountable and made to pay their fair share of relevant taxes including back duty taxes owed especially VAT,” he said.

By Abel Ejikeme

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