Taxing times
Africa’s biggest pay-TV company MultiChoice Group said that its subsidiaries have reached a settlement with Nigerian tax authorities and…
Africa’s biggest pay-TV company MultiChoice Group said that its subsidiaries have reached a settlement with Nigerian tax authorities and agreed to pay a total tax amount of about $37.3 million. The Federal Inland Revenue Service (FIRS) froze MultiChoice Nigeria’s accounts in 2022 and served MultiChoice Group with a ₦1.8 trillion ($1.27 billion) tax claim for its Nigeria operation and a $342 million claim for value-added taxes. The group said the total tax amount of ₦35.4 billion to be paid by MultiChoice Nigeria and MultiChoice Africa Holdings will be offset against the security deposits and good faith payments made to date.
MultiChoice owns the satellite television services DStv and GOtv, which are well-known subscription-based platforms in Nigeria. In 2021, the FIRS accused MultiChoice Africa of tax non-compliance, claiming the company never paid VAT and appointed Nigerian banks to freeze and recover ₦1.8 trillion from MultiChoice Nigeria and MultiChoice Africa accounts. FIRS froze the accounts due to under-remittance of taxes and refusal to grant access to servers for audit, according to Muhammad Nami, FIRS executive chairman. Now, the company has agreed to a tax amount. According to the company, this is to offset against “security deposits.” This is the most recent in a series of Nigerian government agencies’ extractions from foreign-owned businesses in the country. The process usually begins with the declaration of a hefty tax demand, leading to negotiations and eventual settlements. This pattern was observed in cases involving MTN and British American Tobacco and is now repeated with Multichoice. Nigeria, of course, has the prerogative to initiate these collection actions. However, it must be balanced against the desire to attract and retain foreign investments at a time when Nigeria desperately needs it. Tax agencies need to uphold fair and transparent tax practices. They should act in good faith, avoiding excessive tax demands that could stifle business growth. While tax compliance is crucial for national development, a country cannot solely rely on taxing businesses for prosperity. Sustainable economic growth requires a balance between taxation and creating an enabling environment for businesses to thrive. Collaborative efforts between tax authorities and businesses can foster trust and long-term success, benefiting both parties and the overall economy.