A Nigerian Tax Appeal Tribunal (TAT) has ruled that MultiChoice Nigeria, a subsidiary of the South African pay-TV broadcaster, must pay an immediate 50 per cent of the 1.8 trillion Naira (€3.7bn) claimed tax backlog.
1,822,923,909,313 Naira is the specific amount claimed, which is greater than MultiChoice’s overall Group market capitalisation. The news hurt MultiChoice’s share price on the Johannesburg exchange, falling 7 per cent on the day.
Nigeria’s Federal Inland Revenue Service (FIRS) confirmed the decision, and said the Tribunal was presented with a “forensic audit” of the alleged debts owed by MultiChoice over past assessment years.
Abdullahi Ahmad, the Director, Communications and Liaison Department of FIRS, said the five-member tribunal led by its Chairman, Prof. A.B. Ahmed, issued the order following an application to it by lawyers for FIRS.
He added that that the lawyers made the application under Order XI of the TAT Procedure Rules 2010, which requires Multichoice or any other taxpayer who disputes their tax assessments, to make the statutory deposit required under Paragraph 15(7) of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act 2007 (FIRS Act).
According to Ahmad these relevant laws and conditions must be fulfilled before the hearing of MultiChoice’s appeal before the TAT. “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 Multichoice has been evading taxes in Nigeria,” he explained.
MultiChoice raised the prospect of an appeal at the hearing where lawyers for FIRS said that the broadcaster must pay 50 per cent of the disputed sum. The lawyers for FIRS also demanded that MultiChoice Nigeria present its Annual Reports & Management Accounts for the period 2012-2020 to the TAT.
The hearings were adjourned until September 23rd.
However, FIRS has previously announced in July that it would order the freezing of assets held in Nigeria by commercial banks on behalf of MultiChoice Nigeria and MultiChoice Africa.
The decision is not without criticism and a previous and not dissimilar claim against mobile telco operator MTM which saw Nigeria’s taxation authority claim some $2 billion. The claim was withdrawn with comments from investors saying that Nigeria’s actions were damaging its prospects and reputation as an investment destination.
MultiChoice has previously stated that it respects and is comfortable that it complies with the tax laws of Nigeria. “We have been and are currently in discussion with FIRS regarding their concerns and believe that we will be able to resolve the matter amicably.”