A dispute between Nigerian tax authorities and MultiChoice Group Ltd., Africa\u2019s biggest pay-TV provider, intensified Wednesday, showcasing the risk international firms face as the continent\u2019s largest economy tries to bolster revenue collections.<\/p>\n
MultiChoice was ordered by a Nigerian tribunal to pay 50% of a disputed 1.8 trillion naira ($4.4 billion) tax bill, prompting a rush to sell shares of the Johannesburg-based company and erasing $240 million of market value in less than two hours.<\/p>\n
The stock gained 3.6% at 9:23 a.m. local time on Thursday after the company said that the court directive doesn\u2019t compel it to pay half of the disputed amount.<\/p>\n
It may turn into a protracted standoff, if history is an indication. In 2015, South Africa\u2019s MTN Group Ltd. was slapped with a $5 billion fine for failing to deregister subscribers in Africa\u2019s most-populous nation without proper registration. While the continent\u2019s largest mobile-phone provider eventually settled — after months of negotiations — for a far lower penalty, its stock hasn\u2019t fully recovered.<\/p>\n
\u201cNigeria, while the biggest economy in Africa, comparatively has very low levels of tax collection,\u201d said Greg Davies, a fund manager at Cratos Capital Pty. \u201cThis has sometimes led to difficult situations for South African companies operating in the country. The South African government should speak out on this, as it potentially also has an impact on pension funds invested in businesses such as MultiChoice.\u201d<\/p>\n
MTN went on to have disputes over tax and dividends withdrawn from Nigeria, its biggest market.<\/p>\n
Nigeria\u2019s tax revenue as a proportion of gross domestic product is one of the lowest globally, according to the International Monetary Fund. President Muhammadu Buhari\u2019s government collected 8.26 trillion naira ($20 billion) in taxes last year. That compares with South Africa\u2019s $85.3 billion.<\/p>\n
And it\u2019s not just tax battles that are a concern for South African investors. Earlier this year, Shoprite Holdings Ltd., Africa\u2019s largest food retailer, followed at least four other companies in exiting the West African nation after struggling with supply-chain disruptions and repatriation of funds.<\/p>\n
Nigeria\u2019s Federal Inland Revenue Service imposed the penalty on MultiChoice as a condition to an appeal being heard in a Lagos court. The next hearing is on Sept. 23. The stock declined 8% to a near 11-month low in Johannesburg on Wednesday.<\/p>\n
The pay-TV provider continues to engage with authorities, the company said in an emailed statement. The firm is the operator of DSTV, a satellite TV provider across sub-Saharan Africa that shows English Premier League football, hit U.S. dramas as well as local content.<\/p>\n
Nigeria\u2019s tax authority asked lenders to freeze MultiChoice\u2019s local bank accounts to recover the alleged tax arrears last month. The decision came after the company refused to grant access to its servers for an audit, Nigeria\u2019s Federal Inland Revenue Service said at the time.<\/p>\n
A dispute between Nigerian tax authorities and MultiChoice intensified Wednesday, showcasing the risk firms face as the continent\u2019s largest economy tries to bolster revenue collections. <\/p>\n","protected":false},"author":341034,"featured_media":411362,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[24],"tags":[42,475],"class_list":["post-411450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-broadcasting","tag-mtn","tag-multichoice"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/411450"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=411450"}],"version-history":[{"count":0,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/411450\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/411362"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=411450"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=411450"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=411450"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}