Both parties announced the agreement in a joint statement issued in Abuja, yesterday.
By the broad terms of the agreement, MultiChoice shall withdraw all pending lawsuits. Also, FIRS commenced a Forensic Systems Audit of MultiChoice accounts on March 8, 2022, to determine the tax liability of the company.
In April, last year (2021), FIRS issued Notices of Assessment and Demand Notices in the sum of N1.82 trillion on the company.
MultiChoice, which disputed the assessments, approached the Tax Appeal Tribunal (TAT). This development led to a series of cases at both the TAT and Federal High Court.
With the agreement and resumption of the Forensic Systems Audit, it is expected that the dispute will be resolved very soon.
Recall that FIRS Chairman, Muhammad Nami, had claimed that the company violated all its obligations and undertakings with the agency.
Nami stated that the company failed to promptly respond to correspondences, and described it as lacking in data integrity and transparency as it continued to shut out FIRS from accessing its records.
While the issue lingered, tax and business advisory firm, Andersen, questioned how FIRS arrived at the N1.8 trillion tax bill it slammed on MultiChoice Nigeria.
The firm’s position was contained in an article published on its website, titled, ‘Reputational Risks and Tax: MultiChoice as Case Study.
The article stated that FIRS might have adopted a faulty computational premise, giving an impression that it is prejudiced against foreign companies operating in Nigeria.
The firm described as misleading, FIRS’ claim that Nigeria accounts for 34 per cent of the total revenue of the MultiChoice Group, ahead of Kenya with 11 per cent and Zambia in third place with 10 per cent. It questioned how this could be the basis for arriving at N1.8 trillion and $342 million liability.
Andersen, quoting the MultiChoice Group’s audited financial statements for 2019, said Nigeria accounts for 34 per cent of the group’s Rest of Africa (RoA), with the RoA accounting for 29.6 per cent of the group’s revenues.
“Thus, the effective total revenue of Nigeria to the group is 10.19 per cent. It is arguable that 10.19 per cent is significantly different from 34 per cent of total revenue. However, one cannot help but question whether some other parameters in the computation of the alleged tax liability are also misleading,” Andersen stated.
Andersen also argued that the statement issued by FIRS hints at bias.
“The FIRS chairman observed that the issue with tax collection in Nigeria, especially from foreign-based companies conducting businesses in Nigeria and making massive profits, is frustrating and infuriating,” the agency said.
This, Andersen noted, amounted to the delineation of taxpayers by nationality and could create bias in the mind of the public against foreign-owned companies.
