- Nigeria’s tax authority has instructed banks to freeze the accounts of MultiChoice, Reuters reported on Thursday.
- The pay television group is accused of denying FIRS access to its records.
- MultiChoice denied this, saying it the matter is apparently based on unfounded allegations that Multichoice Nigeria have not fully disclosed all existing subscribers to authorities.
According to a Reuters report, Nigeria’s Federal Inland Revenue Service (FIRS) has instructed local banks to freeze the accounts of MultiChoice to recover 1.8 trillion naira (around R63 billion).
The Nigerian tax authority accused the pay-TV group that it "persistently breached all agreements and undertakings with the Service" and that it did "not promptly respond to correspondences", lacked data integrity and denied FIRS access to its records, Reuters reported.
According to a report in The Guardian Nigeria, FIRS chairman Muhammad Nami said that MultiChoice’s parent company, which provides services to the local group, has not paid Value Added Tax (VAT) since its inception.
Following the reports, MultiChoice's share price fell by 6.5% to 782c by Thursday afternoon.
In a statement, MultiChoice, which owns DStv, said that it became aware about the issue through news reports.
"We have not received formal notification of this matter, however, shareholders are advised that the Group is aware of reports in the media regarding an ongoing tax matter with the Nigerian Federal Inland Revenue Service," the statement read.
The statement also said: "The matter is apparently based on unfounded allegations that MultiChoice Nigeria have not fully disclosed all existing subscribers to authorities".
MultiChoice said it "engaged openly with FIRS" in a transparent and constructive manner and the company believed the matter would be amicably resolved.
"Our operations are continuing in Nigeria," the statement concluded.
The new Nigerian crackdown on MultiChoice carries echoes of MTN’s treatment in that country.
MTN faced various penalties, including a fine of more than $5 billion (later reduced to $1.7 billion) in 2015 for failing to disconnect five million SIM cards that belonged to unregistered users.
Then, three years ago, the Nigerian central bank ordered MTN to return $8.1 billion in dividends which it paid to its parent company in SA. According to the bank, this was an illegal payment. Following lengthy negotiations, MTN made a "resolution payment" of $53 million.
Shortly after that, Nigeria’s attorney general slapped MTN with a $2 billion tax bill for payments to foreign suppliers. This was latter scrapped.
Last year, the Nigerian Communications Commission surprised MTN and other mobile operators by giving them a tight deadline to link the ID numbers of their subscribers to their SIM cards on a national database – or face being stripped of their licences. This caused a scramble to verify tens of millions of users.
MTN said in May this year that it is still facing challenges to repatriate R4.3 billion in dividends from Nigeria due to challenges securing foreign currency in that country.
MultiChoice is struggling with a similar problem, with its cash balance in Nigeria increasing by R800 million to R2.3 billion over the past year.
MultiChoice saw strong growth in Nigeria over the past year, with subscribers up 9% and subscription revenue from that country jumping 20% to R6.8 billion.