FG, MultiChoice agree to $37m tax settlement
Africa’s biggest pay TV company, MultiChoice Group, says its Nigerian subsidiary has reached a settlement with the Federal Government via the Federal Inland Revenue Service and agreed to pay a total tax amount of about $37.3m, according to a Reuters report on Thursday.
FIRS froze MultiChoice Nigeria’s accounts in 2022 and served MultiChoice Group with a N1.8tn ($1.27bn) tax claim for its Nigeria operation and a $342m claim for value-added taxes.
The group said in a statement that the total tax amount of N35.4bn to be paid by MultiChoice Nigeria and MultiChoice Africa Holdings would be offset against the security deposits and good faith payments made to date.
MultiChoice is the owner of the satellite television, DSTV, a popular subscription-based platform in Nigeria.
MultiChoice said in a statement on Thursday that “In terms of the agreement, MultiChoice Nigeria and MultiChoice Africa shall pay a total tax amount of N35.4bn ($37.3m), to be offset against the security deposits and good faith payments made to date.”
When contacted, the Public Relations Officer of Multichoice Nigeria, Caroline Oghuma, did not respond to phone calls as of the time of filing this report.
In 2021, reported that the tax agency appointed some commercial banks to recover the sum of N1.8tn following the groups’ continued refusal to grant FIRS access to their servers for audit.
The then FIRS Executive Chairman Muhammad Nami had said, “The level of non-compliance by MultiChoice Africa, the parent Company of MultiChoice Nigeria is very alarming. The parent company, which provides services to MCN, has never paid Value Added Tax since its inception.”
The tax agency also complained that the group persistently breached all agreements and undertakings with the service, “they would not promptly respond to correspondences, they lack data integrity and are not transparent as they continually deny FIRS access to their records.”
MultiChoice later went to court to challenge the penalty imposed by the tax authority for skipping taxes and denying auditors access to its servers.
In March 2022, MultiChoice and FIRS reached a resolution for their tax disputes. As a result, MultiChoice withdrew all ongoing lawsuits, and FIRS conducted a forensic audit to determine the accurate tax liability.
The statement then read in part, “By the broad terms of the agreement, MultiChoice shall withdraw all pending lawsuits towards an amicable resolution of the dispute.
“Also, as part of the agreement, the FIRS commenced a forensic systems audit of MultiChoice accounts on Tuesday, 8 March, 2022 to determine the tax liability of the Company.”
Approximately 34 per cent of the MultiChoice group’s total revenue comes from Nigeria, followed by Kenya at 11 per cent, and Zambia in third place with around 10 per cent.