MPEG Advanced Audio Coding (AAC) is one of the most distinguished multichannel digital audio compression systems. Based on AAC, we develop a progressive syntax-rich multichannel audio codec in this work. It not only supports fine grain bit rate scalability for multichannel audio bitstreams but also provides several desirable functionalities. MPEG-4 version-2 audio coding supports fine grain bit rate scalablility in its Generic Audio Coder with the Bit-Sliced Arithmetic Coding (BSAC) tool that provides scalability for mono or stereo audio, but not for multichannel audio. A formal subjective listening test shows that, the proposed algorithm achieves a better performance at several different bit rates when compared with MPEG-4 BSAC for mono audio sources.