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Multichoice shares crash as FIRS asks commercial banks to recover N1.8trn in unpaid taxes

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THE Federal Inland Revenue Service (FIRS), on Thursday, requested some commercial banks in the country to freeze and recover N1.8 trillion from accounts of MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA).
Following this directive, MultiChoice Group’s share price dropped by 2.92 per cent at 12:15 pm on Thursday after the FIRS’ statement. The television and entertainment services giant is yet to issue a statement.

Director of Communications and Liaison Department of the FIRS in Abuja Abdullahi Ahmad, who explained the decision to freeze MultiChoice accounts, said both companies breached previous agreements with the FIRS and refused to grant access to their records for audit.

“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,” Executive Chairman of the FIRS Muhammad Nami was quoted as saying in the statement.

“The companies are involved in the under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company” Nami further said.

MultiChoice Group began the year with a share price of 134.00 rands but has since lost 10.57 per cent off that price valuation, ranking it 387th on the Johannesburg Stock Exchange (JSE) in terms of year-to-date performance.

Shareholders’ worries are further compounded by the fact that MCG has lost 12.21 per cent of the stock’s value from June 8 to date. The current development is a blow to the dwindling fortunes of the group on the JSE.

MultiChoice is the current South African company facing a huge tax bill in Nigeria after MTN Nigeria in 2018 was ordered to pay $2 billion in taxes for importing equipment and payments to foreign suppliers between 2007 to 2017. However, the huge tax bill was later dropped.

The company was also charged N330 million for failing to deactivate more than five million unregistered SIM cards. but it negotiated a reduced fine and  had paid N275 billion as at May 2019.

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The FIRS chairman stated that Nigeria contributed 34 per cent of total revenue for the Multi-Choice Group based on intelligence gathering while Kenya contributed 11 per cent and Zambia in third place with 10 per cent.

“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. 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.

“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,” he said.

In 2019, MultiChoice Group broke from Naspers, Africa’s biggest company by market capitalisation, reporting its revenue in two segments mainly South Africa and the rest of Africa. The rest of Africa contributes one-third of its revenue of which its biggest market is Nigeria, based on its annual report for the year ended March 31.

 

Amos Abba is a journalist with the International Center for Investigative Reporting, ICIR, who believes that courageous investigative reporting is the key to social justice and accountability in the society.

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