MultiChoice Group Ordered to Pay $4.38B Tax Backlog

Last month we reported that Nigeria’s Federal Inland Revenue Service (FIRS) had instructed banks to freeze the accounts of media entertainment firm MultiChoice Group and its Nigerian subsidiary for breaching agreements and denying access to their records for auditing. Now news coming through according to FIRS, is that the Nigerian tax tribunal has ordered the local unit of South Africa’s pay-TV company Multichoice to pay 50% of a disputed 1.8 trillion naira ($4.38 billion) (R65 billion) tax bill relating to previous years.

The amount is a deposit and condition of the pay-TV company’s case being heard, the Federal Inland Revenue Service says in an emailed statement on Wednesday. The case has been adjourned for hearing on Sept. 23. This has resulted in MultiChoice’s stock slump by 6.6% as of 4:33 p.m. in Johannesburg, hitting near 11-month lows.

Multichoice Nigeria, a division of a South African group, provides DSTV, a cable TV product that is popular in Nigeria. FIRS Chairman Muhammad Nami said at the time that banks would have to recover the 1.8 trillion nairas which the tax service said it was owed. The tax tribunal adjourned the case until September 23, subject to the company complying with its order, FIRS said in its statement.

Multichoice is the latest South African group with a significant presence in Nigeria to face a multi-billion-dollar tax demand from the West African country. In January 2020, Nigeria’s attorney general withdrew a $2 billion tax bill it had sought to impose on the mobile telecoms group MTN, after a long saga that investors said had damaged Nigeria’s reputation as an investment destination.

The firms are part of South African-headquartered MultiChoice Group, which provides television and other entertainment services across Africa. MultiChoice Group, spun off in 2019 from Naspers, makes a third of its revenues from its business elsewhere on the continent outside South Africa and Nigeria is its biggest market in that segment, the company said in its annual report.