Andersen faults FIRS on N1.8trn tax liability on Multichoice

TAX and business advisory firm, Andersen, has questioned how the Federal Inland Revenue Service ( FIRS), arrived at the N1.8 trillion tax bill it slammed on Multichoice Nigeria, warning that it could harm the reputation of both parties.

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 the FIRS may have adopted a faulty computational premise, giving an impression that it is prejudiced against foreign companies operating in Nigeria.

The firm described as misleading, the 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 as 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 the FIRS hints at bias.

"The FIRS Chairman observed that the issue with tax collection in Nigeria, especially from foreignbased companies conducting businesses in Nigeria and making massive profits is frustrating and infuriating," the agency said.

This, Andersen noted, amounted to delineation of taxpayers by nationality and could create bias in the mind of the public against foreign- owned companies.