MultiChoice has reached a settlement agreement of 35.4 billion naira (equivalent to R475 million) with Nigerian tax authorities following a dispute over alleged outstanding taxes totaling 1.8 trillion naira.
At the time of the tax claim, Nigeria’s valuation in rand amounted to approximately R63 billion. However, as of February 1, 2024, the value of 1.8 trillion nairas had decreased to R37.8 billion, and further declined to R24.2 billion at the time of reporting.
Correspondingly, the value of the settlement decreased from approximately R705 million at the beginning of the month to R475 million. This settlement amount will be credited against security deposits and prior good faith payments made by MultiChoice.
The resolution follows MultiChoice’s announcement in March 2022 of reaching a mutually agreeable solution with the Nigerian Federal Inland Revenue Service (FIRS), subsequent to the freezing of MultiChoice’s bank accounts in July 2021. FIRS accused the pay-TV operator of non-payment of VAT since its establishment in Nigeria.
As part of the agreement, MultiChoice agreed to withdraw all pending legal actions, while FIRS resumed a Forensic Systems Audit of MultiChoice’s accounts to ascertain the company’s tax liability.
MultiChoice has now disclosed the outcome of the audit and settlement negotiations with FIRS, stating that the parties reached a comprehensive settlement agreement without setting any precedent.
It’s worth noting that MultiChoice is not the sole South African entity targeted by Nigerian authorities. In 2018, the Central Bank of Nigeria also demanded that MTN repatriate $8.1 billion it allegedly transferred illegally. Following extended discussions, MTN agreed to a “resolution payment” of $53 million to resolve the matter.
