The Federal Inland Revenue Service (FIRS) and MultiChoice Group Limited, Africa’s biggest pay-TV provider, yesterday agreed to an out-of-court settlement on the $4.4 billion tax dispute.
According to the terms of the deal, the South African company will withdraw lawsuits and the FIRS will conduct a forensic audit of MultiChoice’s accounts to determine its tax liability, it said in a statement without providing further details of the settlement.
MultiChoice went to court last year to challenge the penalty imposed by the tax authority, which said the owner of the DSTV service evaded taxes and denied auditors’ access to its servers.
Last year, FIRS had engaged some commercial banks as agents to freeze and recover N1.8 trillion from accounts of MultiChoice Nigeria Limited and MultiChoice Africa.
The FIRS had explained that the decision to appoint the banks as agents and to freeze the accounts was as a result of the Groups’ continued refusal to grant FIRS access to their servers for audit.
The service said it also discovered that the companies persistently breached all agreements and undertakings with the Service.
In a statement, Executive Chairman FIRS, Muhammad Nami, was quoted as having said: “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.”
FIRS 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 profit 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.’’