Nigeria’s Federal Inland Revenue Service (FIRS) has instructed banks in the West African country to freeze accounts belonging to the MultiChoice Group and its subsidiaries. The revenue service has accused the massive entertainment media provider, amongst the largest on the continent, of alleged tax evasion.
“It was discovered that [MultiChoice and its subsidiaries] persistently breached all agreements and undertakings with the Service, they would not promptly respond to correspondences, they lacked data integrity and are not transparent as they continually deny FIRS access to their records,” FIRS said in a statement.
“The companies are involved in the under-remittance of taxes which necessitated a critical review of the tax-compliance level of the company,” said FIRS Executive Chair Muhammed Nami. Following this, Nami claimed that MultiChoice and its parent company have never paid Value Added Tax (VAT) in Nigeria since its inception.
According to Fin24, MultiChoice’s share prices fell by 6.5% following the FIRS report.
In response, MultiChoice issued a statement where it claims it became aware of the situation only through news media reports, never receiving any formal notification on the matter.
“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 matter is apparently based on unfounded allegations that MultiChoice Nigeria has not fully disclosed all existing subscribers to authorities,” it continues.
MultiChoice says that it has “engaged openly with FIRS” in a transparent and constructive manner. The company believed that this matter would be amicably resolved.
“Our operations are continuing in Nigeria,” the statement concludes.
Similarities to MTN’s Treatment in Nigeria
The Daily Maverick writes that the allegations against MultiChoice have investors afraid that this move by Nigerian authorities is a repeat of the reported treatment faced by South African telecom giant MTN in the country.
In 2018, Nigeria ordered MTN to pay close to $2-billion over alleged unpaid taxes, although this matter was soon dropped after a few months of “wrangling”.
This latest tax fine of nearly 2-trillion Naira ($4.4-billion) is much steeper than the 700-billion Naira ($1.7-billion) MultiChoice says it has contributed to the Nigerian economy.
MultiChoice streams satellite TV to between 1.5-million and 2-million Nigerian subscribers, and has invested heavily in the local Nollywood film industry, producing content in the local Igbo, Yoruba and Hausa languages.