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Tax evasion: Tribunal directs DSTV to pay N900bn before hearing

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MULTICHOICE Nigeria Limited, owners of popular cable television services DSTV, has been ordered to pay 50 per cent of N1.8 trillion (N900bn), which the Federal Inland Revenue Service (FIRS) has determined through a forensic audit as amount it owes in taxes.

The five-member Tax Appeal Tribunal (TAT) sitting in Lagos, led by its Chairman A.B. Ahmed, issued the order on Tuesday,  August 24, following an application by  counsel to FIRS.

The Director of Communications and Liaison Department at the Federal Inland Revenue Service Abdullahi Ismaila Ahmad confirmed this in a statement issued on Wednesday.

According to the statement, the FIRS counsel made the application under Order XI of the TAT Procedure Rules 2010 which enables a party to make an application at any stage of the proceedings.

Counsel for FIRS drew the attention of the Tribunal to Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 and urged the tribunal to direct Multichoice Nigeria Limited to deposit with the FIRS 50 per cent of the amount of the assessment under appeal as security. The counsel also this should be a condition that must be fulfilled before the prosecution of the appeal brought before TAT.

In certain defined circumstances to which the Multichoice appeal fits, Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act) 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 trillion on April 7, 2021.

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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 the firm has been evading taxes in Nigeria.

At Tuesday’s hearing of the matter in Appeal No: TAT/LZ/CIT/062/2021 19/08/2021 (Multichoice Nigeria Limited v. Federal Inland Revenue Service), 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.

Multichoice also requested to produce before the tribunal, the integrated annual report and management account statements of Multichoice Group Ltd for tax between 2012  and 2020., among others.

In response, however, 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 submission and directed Multichoice Nigeria Limited to deposit with the FIRS, an amount equal 50 per cent of the assessment under the appeal, including a sum equal to 10 per cent of the said deposit as a condition precedent for further hearing of the appeal.

Thereafter, TAT adjourned the appeal to September 23,  2021, for a report of compliance with its order and continuation of the hearing, subject to compliance with the tribunal’s order.

Recall, the Federal Inland Revenue Service (FIRS) had, last month, engaged some commercial banks as agents to freeze and recover N1.8 trillion from accounts of MultiChoice Nigeria Limited and MultiChoice Africa.

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

The FIRS explained that the decision to appoint the banks as agents and to freeze the accounts was a result of the group’s  continued refusal to grant FIRS access to its servers for audit.

The company’s services have severally been called to question in recent times, following its refusal to implement a pay-per-view regime in Nigeria. It has also been accused of arbitrarily increasing subscription fees at regular intervals.

The recent accusations of tax evasion, if proven, could hurt Multichoice in Nigeria.

MultiChoice has been called to question severally by the Federal Competition and Consumer Protection Commission as well as the National Assembly in recent times over its service offerings to Nigerians. It is argued that a company that benefits so much from the country ought to give back.

The government has been intensifying efforts to broaden the tax base with  reforms.

“The government needs to realise that it has to ensure it works within the ambit of the law in enforcing its regulatory stance with industry stakeholders.How it has allowed the debt of FIRS to rise to this extent  before wielding the big stick says a lot about their mode of operations.” Associate Consultant to the British Department of International Development (DFID) Celestine Okeke told The ICIR.

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