Differentiating Between The Tax Appeal Tribunal Rulings On Multichoice Nigeria And Multichoice Africa

By Bernard Okri

The job of the Tax Appeal Tribunal is to resolve tax disputes in a just, speedy, convenient and affordable manner. Its primary assignment is not to protect businesses, but to ensure that businesses who find themselves disputing tax assessments can find justice within the framework of Nigeria’s tax laws.

It is an erroneous thinking to assume that the Tax Appeal Tribunal functions to give rulings that would first and foremost promote favourable investment climates — even where a business that appeals a tax assessment before it is accused of being found wanting in honouring its tax obligations, as we have seen with the cases of Multichoice Africa and Multichoice Nigeria versus the Federal Inland Revenue Service.

The two rulings of the tribunal are in the public domain, and have been the subject of conversations and arguments. To the passive observer they sound alike, but they are distinct and each is birthed in different circumstances from the other. Both cases are however underpinned by the same issue: the allegations of failure to pay the right taxes.

The FIRS lost its preliminary objection against Multichoice Nigeria’s appeal at the Tax Appeal Tribunal sitting in Lagos. It had asked the tribunal to toss out the appeal of Multichoice Nigeria for failing to comply with the Fifth Schedule of the FIRS Act, at Paragraph 15 (7) that mandates a disputant of an FIRS assessment to deposit with FIRS an amount equal to the tax paid by it in the “preceding years” or half of the disputed amount under appeal whichever is the lesser amount plus ten percent. The Tribunal disagreed with the interpretation of the FIRS and said Multichoice had complied by depositing a sum being the amount equal to the tax paid by Multichoice in the preceding year plus ten percent, and not the “preceding years” as the FIRS sought.

In the matter before the Tax Tribunal in Abuja, the FIRS did not rely on this provision again but on the new rule issued by the Minister of Finance, Hajia Zainab Shamsuna in June this year. The rule, contained in Order 3 Rule 6 of the Tax Appeal Tribunal Procedures states that for an appeal against an assessment to be heard by the Tax Appeal Tribunal, the appellant must pay half of the disputed sum as a security deposit before it can make the filing. An affidavit verifying the payment is further required from the appellant. The FIRS consequently argued for the striking of the appeal by Multichoice Africa on the basis that the company had failed to comply with this procedural rule necessary for the filing of an appeal against its assessment.

Multichoice Africa had not complied with the requirement. And FIRS did not hold back in presenting its preliminary objection against the appeal to the Tribunal. Multichoice Africa was more or less coming to the courts seeking justice and failing to adhere to the requirements for an appeal to be filed. It did not come to equity with clean hands as the maxim says. The argument of the FIRS was therefore sustained and Multichoice Africa’s appeal was kicked out. The ignorance of Multichoice Africa to the updated rules is no excuse in law.

That is in fact not the crux of the matter. The bone of contention is the argument by some that the matter between Multichoice Africa and Multichoice Nigeria are same contentions which saw different rulings by the Tax Appeal Tribunal. This is a very erroneous position.

Both matters were distinct: while the FIRS relied on its establishing Act for the matter with Multichoice Nigeria, which focused on establishing the exact amount that was to be deposited by the company, the latter case with Multichoice Africa saw the FIRS relying on the updated Procedural Rules for its case, seeking that the matter be struck out for not following the right procedure, which was to make a deposit in a stipulated account as a prerequisite for filing appeals.

It is important to state that as at the time the FIRS was prosecuting its matter with Multichoice Nigeria, the procedural requirement in Order 3 Rule 6 of the Tax Appeal Tribunal had not been issued yet.

Commentators, like a certain Bashir Oyintiloye, who claim that the Tax Appeal Tribunal took one route for one matter and another for a similar matter do not understand the issues in fact.

This author particularly claims that “the blanket 50% payment prescribed by the new Tax Tribunal Procedure are inconsistent with the FIRS Act.” This is a flawed argument, as both are complimentary. The Order stipulates that as a prerequisite there must be a deposit to an account to be determined by the Tribunal before an appeal can be commenced, while the FIRS Act defines how much must be paid to it, where it has assessed a company and that company disputes its assessment, and wishes to appeal it. This flows from the logic that notwithstanding that an appeal is pending, tax that is due is expected to be paid.

In each of the cases the FIRS presented before the court an argument consistent with extant and updated laws. It was left to the court to determine whether the argument was in tune with law or not, and for the appellant to oppose it with superior argument, facts and law. In the Multichoice Nigeria case, we saw that the parent company of DSTV presented a compelling argument and got the blessing of the courts, while in that of Multichoice Africa, the FIRS had the better argument.

The courts are not Father Christmas. They would act based on the laws, facts and arguments presented before them, not superstitious beliefs, confused interpretations from public commentators or romanticised views from economic schools of thought.

The Tax Appeal Tribunal did what any other court would do: interpret the law as argued before it.

Bernard Okri is the founder of Global Economic Policy Initiative