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FIRS vs MultiChoice: Addressing the facts
The MultiChoice Group says it recorded a 9 per cent increase in subscribers in Nigeria in its full year numbers but is facing challenges and risks with inflation, FX and oil prices. These risks may have been compounded as the Federal Inland Revenue Service of Nigeria alleges that the entertainment company has outstanding tax obligations to the tune of 1.8 trillion naira, but the cable provider say they have complied with Nigeria's tax laws. Michael Ango, Partner for Tax Advisory and Regulatory Services at Andersen joins CNBC Africa for more.
Fri, 09 Jul 2021 12:11:30 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The FIRS alleges that the MultiChoice Group owes 1.8 trillion Naira in unpaid taxes, representing a significant portion of Nigeria's revenue for 2021.
- The partner for tax advisory and regulatory services at Andersen clarified the legal basis for the FIRS actions and raised questions about the duration of the alleged non-compliance.
- Micheal Ango emphasized the need for a more nuanced and proactive approach from tax authorities to safeguard the reputation of companies and ensure adherence to legal processes.
The MultiChoice Group has recently revealed a 9% increase in subscribers in Nigeria in its full-year numbers but is currently facing challenges and risks associated with inflation, forex, and oil prices. However, these risks have been further compounded as the Federal Inland Revenue Service (FIRS) of Nigeria alleges that the entertainment company has outstanding tax obligations amounting to a staggering 1.8 trillion Naira. Despite this claim, the cable provider maintains that they have fully complied with Nigeria's tax laws. In a recent CNBC Africa interview, Michael Ango, a Partner for Tax Advisory and Regulatory Services at Andersen, shed light on the matter.
Ango emphasized that the situation at hand is essentially a dispute between a taxpayer and the tax authority, a common occurrence in the business world. The appointment of an agent by the FIRS to take action against MultiChoice is not an unprecedented move. However, what stands out in this case is the exorbitant amount of alleged unpaid taxes, which represents about 13% of Nigeria's revenue for 2021. The public nature of the FIRS statement regarding this dispute is what truly sets it apart from routine tax matters.
The partner clarified the specific legal provisions cited by the FIRS to support its actions, highlighting that tax defaulters can have funds in their accounts frozen by banks under the relevant laws until the outstanding amounts are remitted to the tax authority. However, Ango noted the lack of information regarding the timeline over which the 1.8 trillion Naira tax liability accumulated, prompting questions about the nature and duration of the alleged non-compliance.
Moreover, Ango addressed the broader implications of the FIRS's approach on the reputation of companies like MultiChoice. He drew parallels with previous tax disputes involving companies like MTN, stressing the need for a more nuanced and proactive approach from tax authorities to prevent undue harm to corporate reputations. While acknowledging the government's imperative to increase revenue collection, Ango emphasized the importance of adherence to legal processes to ensure transparency and fairness.
In response to concerns about potential repercussions for foreign companies operating in Nigeria, Ango underscored the global nature of tax enforcement and the universal objective for tax authorities to maximize revenue within their jurisdictions. Nevertheless, he cautioned against hasty or publicized actions that could detrimentally impact companies' public image and shareholder confidence.
As FIRS continues its pursuit of the alleged tax liabilities from MultiChoice, the business community will keenly observe the developments and the eventual resolution of this high-stakes tax dispute.
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