MultiChoice Gets Breather in  FIRS ‘s N1.8 Trillion Tax Claims

Lagos zone of the Tax Appeal Tribunal (TAT) hearing the N1.8 trillion tax dispute between the Federal Inland Revenue Service (FIRS) and MultiChoice Nigeria has announced October  20 as the date for the ruling on the matter.

The announcement was made by Professor AB Ahmad, the tribunal chairman, at the resumed hearing. MultiChoice described the alleged tax liability as a product of “hastiness, lack of thoroughness and presumptuousness”.

The saga which began earlier this year has taken several dramatic twists akin to MTN, communications giant, which also a couple of years back faced the censure of Nigerian authorities over disputed regulatory issues, involving the non-disclosure of subscribers.

At the hearing, counsel to the FIRS urged the tribunal to demand proof of deposit of N900billion (50 per cent of the alleged tax liability) it ordered MultiChoice to make on 24 August before the continuation of its appeal.

The FIRS argued that Paragraph 15(7) of the Fifth Schedule to the FIRS (Establishment) Act 2007 compels a taxpayer disputing its assessment to make a statutory payment of 50 per cent of the disputed sum before the tribunal could prosecute an appeal brought before it.

The agency stated that in the absence of a proof of deposit, it should discontinue hearing of the appeal and enter judgment against MultiChoice.

MultiChoice, however, stated that it has complied, as the referenced section of the FIRS Act does not compel it to pay N900billion but an amount equal to its tax in the preceding year of assessment or one half of the disputed tax assessment under appeal, whichever is the lesser amount plus 10%.

MultiChoice stated that in fulfillment of the condition and demonstration of good faith, it deposited N10billion with the FIRS pending the determination of the actual tax liability, if any. In a counter-affidavit attached to its notice of appeal, MultiChoice stated that depositions in FIRS’ affidavit are arbitrary and contrived.

It branded, as false, the FIRS’ claim that it receives third party payments as part of its revenue streams, saying it only receives payments on its products and services through third party platforms such as Interswitch and Quickteller, which are only payment channels.

It also faulted the FIRS’ inclusion of DAAR Communications and Channels Television among third parties from which it receives payments, saying the two broadcasters free-to-air offerings on its platforms.

MultiChoice similarly denied that it receives most of its revenue through online channels, stating that its dealers and agents sell decoders and dishes for cash, while it receives most of its payments in its bank accounts.

In similar vein, MultiChoice said the FIRS erred in its claim that it receives revenues from outside Nigeria, as it services are limited to country.

It noted that what the FIRS interpreted as remittances from outside Nigeria was a summary of the 2019 and 2020 financial performance of MultiChoice Group (MCG).

It branded as misleading FIRS’ assumption that Nigeria accounts for 34 per cent of MCG’s subscription revenue, saying the figure refers to 34 per cent of the revenue from the rest of Africa except South Africa.

“Of the 7.7million active subscribers that MCG had in the rest of Africa in 2019, Nigeria accounted for 34 per cent of them. That is about 2.6million thereof. It is important to re-stress that the 34 per cent of active subscribers in 2019 is 34 per cent of the active subscribers in the rest of Africa and not 34 per cent of MCG’s revenue as erroneously claimed by the Applicant,” MultiChoice said.

On the allegation that it has refused to cooperate with the FIRS over forensic systems audit, MultiChoice said aside from being compliant in its tax obligations, it is the FIRS that has frustrated the audit by demanding a payment of any of 10%, 25%, 50% or 100% of the disputed tax sum as a condition.