Nigeria DSTV Owner, Multichoice, Resolves Tax Dispute, Commits to $37.3M Payment to FIRS

South Africa's Multichoice Africa Holdings B.V, the parent company of popular cable television brands DSTV and GOTV, has announced that its Nigerian subsidiary has reached a tax settlement with the Federal Inland Revenue Service (FIRS). The settlement requires Multichoice Nigeria to pay a substantial sum of $37.3 million in taxes.

The tax dispute, which began with FIRS' plan to engage commercial banks to freeze and recover N1.8 trillion from Multichoice Nigeria Limited (MCN) and Multichoice Africa (MCA), dates back to July 2021. FIRS cited the companies' persistent refusal to grant access to their servers for audit as the reason for the drastic action.

In October 2021, the Tax Appeal Tribunal dismissed Multichoice's appeal against FIRS, emphasizing the company's non-compliance with procedural rules. The FIRS had assessed the unpaid principal sum of Value Added Tax (VAT) at over $123.7 million, imposing a penalty of $218 million, resulting in a total tax liability of $342 million.

Despite Multichoice's claim that the assessment was excessive, the Appeal Tax Tribunal upheld FIRS' preliminary objection, requiring appellants to deposit half of the disputed amount as security for the hearing, a condition Multichoice failed to meet.

The out-of-court settlement, reached in March 2022 between FIRS and Multichoice, involves the payment of N35.4 billion, equivalent to $37.3 million, by MultiChoice Nigeria and Multichoice Africa Holdings.

This amount will be offset against security deposits and good faith payments made by the group to date.
The resolution of this protracted tax dispute marks a crucial development in the relationship between Multichoice and the Nigerian government, providing clarity on the financial obligations and bringing an end to the legal challenges faced by the broadcasting giant in the country.