The Tax Appeal Tribunal (TAT) in Lagos has set October 20 as the deadline for a decision on the N1.8 trillion tax dispute between the Federal Inland Revenue Service (FIRS) and MultiChoice Nigeria.
Professor A.B. Ahmad, the tribunal chairman, announced the announcement at the resumed hearing yesterday. The alleged tax liability was a result of “hastiness, lack of thoroughness, and presumption,” according to MultiChoice.
At the hearing, FIRS counsel urged the tribunal to require proof of deposit of N900 billion (50 per cent of the claimed tax liability) that MultiChoice was directed to make on August 24 before the appeal could be continued.
The FIRS stated that paragraph 15(7) of the Fifth Schedule to the FIRS (Establishment) Act 2007 requires a taxpayer disputing their assessment to pay a statutory payment of 50% of the disputed amount before the tribunal can pursue an appeal.
Where there is a lack of proof of deposit, the agency announced that it will stop considering the appeal and enter judgment against MultiChoice.
MultiChoice, on the other hand, stated that it has complied because the FIRS Act does not require it to pay N900 billion, but rather an amount equal to its tax in the previous year of assessment or one-half of the disputed tax assessment under appeal, whichever is the lesser amount.
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MultiChoice indicated that the company deposited N10 billion with the FIRS to satisfy the condition and demonstrate good faith, pending the assessment of the actual tax amount, if any. MultiChoice claimed that the depositions in FIRS’ affidavit are arbitrary and manufactured in a counter-affidavit attached to its notice of appeal.
It dismissed the FIRS’ accusation that it receives third-party payments as a source of revenue, claiming that it only accepts payments on its products and services through third-party platforms such as Interswitch and Quickteller, which are merely payment channels.
It also criticized the FIRS for include DAAR Communications and Channels Television among the third parties from which it gets money, claiming that the two broadcasters’ free-to-air services on its platforms violated the FIRS’ rules.
MultiChoice, meanwhile, claimed that it makes the majority of its money through internet channels, claiming that its dealers and agents sell decoders and dishes for cash, with the majority of its payments going into its bank accounts.
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MultiChoice, in a similar spirit, claimed that the FIRS erred in claiming that it obtains payments from outside Nigeria because its services are limited to the country. It was pointed out that what the FIRS regarded as remittances from outside Nigeria was a report of MultiChoice Group’s financial performance for 2019 and 2020.
It slammed FIRS’ claim that Nigeria accounts for 34% of MCG’s subscriber revenue, claiming that the statistic relates to 34% of revenue from the whole of Africa, excluding 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.
MultiChoice responded to the charge that it has refused to cooperate with the FIRS over a forensic systems audit by claiming that, aside from being compliant with its tax obligations, it is the FIRS that has stymied the audit by demanding payment of 10%, 25%, 50%, or 100% of the disputed tax sum as a condition.
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