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The tax dispute between the Federal Inland Revenue Service (FIRS) and MultiChoice Group Ltd., Africa’s biggest pay-TV provider, has intensified, as the authorities seek to recover alleged tax arrears from the broadcaster.
In the matter which is being heard in a Lagos court, a Nigerian tribunal ordered Multichoice to pay 50% of a disputed 1.8 trillion naira ($4.4 billion) tax bill, as a condition following an appeal lodged by the pay-TV provider.
This triggered a rush to sell shares of the Johannesburg-based company and erasing $240 million of market value in less than two hours.
Commenting on the dispute, Greg Davies, a fund manager at Cratos Capital Pty said: “Nigeria, while the biggest economy in Africa, comparatively has very low levels of tax collection. This has sometimes led to difficult situations for South African companies operating in the country. The South African government should speak out on this, as it potentially also has an impact on pension funds invested in businesses such as MultiChoice.”
Multichoice continues to engage with authorities, the company said in a statement. The firm is the operator of DSTV, a satellite TV provider across sub-Saharan Africa.
Nigeria’s tax authority asked lenders to freeze MultiChoice’s local bank accounts to recover the alleged tax arrears in July. The decision came after the the company refused to grant access to its servers for an audit, Nigeria’s Federal Inland Revenue Service said at the time.
The next hearing of the dispute is on September 23rd 2021.
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