MultiChoice Group, the leading cable TV company in Africa, has announced a significant development regarding its Nigerian operations. The company’s Nigerian subsidiary has agreed to settle a tax dispute by paying approximately $37.3 million to the Nigerian tax authorities. MultiChoice, which owns DSTV, a widely subscribed satellite television service in Nigeria, has reached this agreement as part of a tax settlement arrangement.
The group’s statement detailed that the total tax obligation, amounting to 35.4 billion naira, will be reconciled against the security deposits and payments made in good faith thus far.
This settlement comes in the wake of actions taken by Nigeria’s Federal Inland Revenue Service (FIRS) in 2022, which included freezing the accounts of MultiChoice Nigeria. The freeze was a response to a substantial tax claim issued against the group, which included a 1.8 trillion naira ($1.27 billion) demand for taxes related to its operations in Nigeria, in addition to a $342 million claim for value-added taxes.
The FIRS justified its claims and subsequent actions by citing its authority under Section 49 of the Companies Income Tax Act of 2004, as amended, and Section 31 of the FIRS (Establishment) Act No. 13 of 2007.
The FIRS further clarified that their move to designate banks as agents and subsequently freeze the accounts stemmed from the group’s persistent denial of FIRS access to their servers for auditing purposes.
The Executive Chairman of the FIRS at the time, Muhammad Nami, criticized the companies for their lack of cooperation, stating, “The companies were slow to respond to communications, lacked data integrity, and were not transparent, as they continuously denied FIRS access to their records.”
During this period, the FIRS expressed serious concerns about the level of non-compliance from MultiChoice Africa (MCA), the parent company of the MultiChoice Group. The authority highlighted that the parent company, which provides services to MultiChoice Nigeria, had not paid Value Added Tax (VAT) since it began operations.
In response to the tax authority’s penalty, MultiChoice pursued legal action. Nonetheless, the South African-based company eventually retracted all pending legal challenges, allowing the Federal Inland Revenue Service to proceed with a forensic audit of MultiChoice’s financial records to accurately assess the company’s tax obligations.
Following extensive negotiations, the MultiChoice Group consented to a payment of $37.5 million, which represents about 10% of the initial tax claim made by the Nigerian tax authorities.
Remember that in 2021, the FIRS issued Assessment Notices and Demand Notices totaling N1.8 trillion to MultiChoice. Following these actions, a Tax Appeal Tribunal (TAT) in Lagos directed MultiChoice to deposit 50% of the N1.8 trillion, which was identified as the outstanding tax amount the company had not paid.
Nigeria stands as a pivotal market for MultiChoice Group, significantly influencing its financial performance by contributing approximately 34% to the conglomerate’s overall revenue. This substantial share underscores Nigeria’s importance as a core market for MultiChoice’s diverse entertainment and media offerings. Following Nigeria, Kenya emerges as the second-largest revenue contributor, accounting for 11% of the group’s total income, Zambia then follows closely behind Kenya, securing the third position by contributing around 10% to the group’s revenue. According to the group’s financial reports, the remaining African countries where MultiChoice operates collectively contribute to 45% of the group’s total revenue.
