MultiChoice’s R63 billion tax surprise

MultiChoice said that it received no notification from the Nigerian Federal Inland Revenue Service (FIRS) regarding its bank accounts being frozen due to allegedly owing 1.8 trillion naira (R63 billion) in taxes.

“We have read the media reports and the statements made by the Federal Inland Revenue Service,” a spokesperson for the pay-TV broadcaster told MyBroadband.

“MultiChoice Nigeria has not received any notification from FIRS. MultiChoice Nigeria respects and is comfortable that it complies with the tax laws of Nigeria.”

The spokesperson said that MultiChoice has been, and currently is, in discussions with FIRS regarding their concerns.

“[We] believe that we will be able to resolve the matter amicably,” MultiChoice stated.

This follows reports that FIRS instructed Nigerian banks to freeze the accounts of MultiChoice Africa and MultiChoice Nigeria Limited.

FIRS alleged that MultiChoice breached agreements and denied access to their records for auditing, and was several years in arrears with its tax.

MultiChoice’s latest results for the year ended 31 March 2021 shows that South Africa accounted for 64% of total revenue, while its operations in the rest of Africa was 32% of revenue. The remainder of the revenue generated by the business comes from its international technology segment.

MultiChoice also noted in its most recent results that its cash holdings in Nigeria increased by R800 million in the past financial year to over R2.3 billion.

“The matter is apparently based on unfounded allegations that MultiChoice Nigeria has not fully disclosed all existing subscribers to authorities. We have engaged openly with FIRS and the engagements are ongoing,” MultiChoice told Bloomberg.

It’s not the first time Nigerian authorities have tried to penalise a South African company over tax matters. The Nigerian unit of telecommunications giant MTN faced a $2 billion (R29 billion) tax claim from the nation’s Attorney General before it was dropped last year.

This “speaks to an inefficient tax system in Nigeria and the earlier the government wakes up to its responsibilities in terms of tax collection, the better for the country,” Tajudeen Ibrahim, analyst at Chapel Hill Denham said by phone.

“I think Multichoice will take steps to ensure that they are able to access their accounts, by sitting down with the government to address the grey areas and ultimately settle whatever the disagreements are,” Ibrahim said.

Reporting with Bloomberg.

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MultiChoice’s R63 billion tax surprise