MultiChoice will pay $37.3 million to FIRS as tax settlement

MultiChoice Group (MCGJ.J), Africa’s largest pay TV conglomerate, said on Thursday that its subsidiary entities have settled a tax dispute with Nigerian tax authorities.

The settlement entails a total tax payment of about $37.3 million.

Recall in 2022, the Nigerian Federal Inland Revenue Service (FIRS) took action by freezing MultiChoice Nigeria’s accounts.

Additionally, MultiChoice Group was issued a tax claim totalling 1.8 trillion naira ($1.27 billion) for its operations in Nigeria, along with a separate claim of $342 million for value-added taxes.

However, the group announced that the combined tax liability of 35.4 billion naira, owed by MultiChoice Nigeria and MultiChoice Africa Holdings, will be deducted from the security deposits and good faith payments made thus far.

$4.4 billion Out of Court Agreement

In March 2022, the Federal Inland Revenue Service (FIRS) and MultiChoice Nigeria agreed to an out-of-court settlement of their pending tax disputes over a$4.4 billion tax settlement.

Subsequently, the South African company withdrew all pending lawsuits and the Federal Inland Revenue Service agreed to conduct a forensic audit of MultiChoice’s accounts to determine the company’s tax liability.

MultiChoice went to court in 2021 to challenge the penalty imposed by the tax authority, which said the owner of the DSTV service skipped taxes and denied auditors access to its servers.

However, both parties agreed to an amicable resolution of their issues which had led to a series of lawsuits.

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.”

Backstory

• Back in April 2021, the FIRS issued Notices of Assessment and Demand Notices in the sum of N1.8 trillion on MultiChoice.
• MultiChoice, which disputed the assessments, approached the Tax Appeal Tribunal (TAT) leading to a series of cases at both the TAT and the Federal High Court.
• In August, the FIRS announced that a TAT court sitting in Lagos has ordered Multichoice to pay 50% of the N1.8 trillion which it had determined to be the amount the company hasn’t made in tax payments.