MultiChoice Resolves Tax Dispute with FIRS, Agrees to $37.3 Million Settlement
MultiChoice Group (MCGJ.J), the leading pay TV conglomerate in Africa, announced on Thursday the resolution of a tax dispute with Nigerian tax authorities, resulting in a settlement payment of approximately $37.3 million.
In 2022, the Nigerian Federal Inland Revenue Service (FIRS) took action by freezing the accounts of MultiChoice Nigeria due to the tax dispute. The dispute stemmed from a tax claim totaling 1.8 trillion naira ($1.27 billion) for the company’s operations in Nigeria, along with an additional claim of $342 million for value-added taxes.
However, MultiChoice Group disclosed that the combined tax liability of 35.4 billion naira, owed by its Nigerian subsidiary and MultiChoice Africa Holdings, would be offset from the security deposits and good faith payments previously made.
Out-of-Court Agreement: $4.4 Billion Settlement In March 2022, MultiChoice Nigeria and the FIRS reached an out-of-court settlement regarding their pending tax disputes, amounting to a $4.4 billion tax settlement. Following this agreement, MultiChoice withdrew all pending lawsuits, and the FIRS agreed to conduct a forensic audit of MultiChoice’s accounts to determine its tax liability.
In 2021, MultiChoice had contested the penalty imposed by the tax authority, alleging that DSTV, its service owner, had not paid taxes and had denied auditors access to its servers. However, both parties opted for an amicable resolution to their issues, which had resulted in multiple lawsuits.
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A statement issued by MultiChoice outlined the terms of the agreement, stating that the company would withdraw all pending lawsuits for an amicable resolution of the dispute. Additionally, the FIRS initiated a forensic systems audit of MultiChoice’s accounts on March 8, 2022, to determine its tax liability.
Background: Dispute Timeline The tax dispute between MultiChoice and the FIRS dates back to April 2021 when the FIRS issued Notices of Assessment and Demand Notices amounting to N1.8 trillion on MultiChoice. MultiChoice contested these assessments, leading to a series of cases at both the Tax Appeal Tribunal (TAT) and the Federal High Court.
In August, the TAT court in Lagos ordered MultiChoice to pay 50% of the N1.8 trillion, which the court determined to be the outstanding tax payments owed by the company.
By reaching a settlement with the FIRS, MultiChoice aims to bring closure to the protracted tax dispute, allowing it to focus on its operations and investments in Nigeria and across Africa.
