MultiChoice bank accounts in Nigeria have been frozen in connection with an alleged 1.8 trillion dollar tax fraud
MultiChoice's bank accounts in Nigeria have been frozen in connection with an alleged 1.8 trillion dollar tax fraud
Nigeria's Federal Inland Revenue Service (FIRS) announced Thursday that it has directed commercial banks to freeze the accounts of MultiChoice Nigeria Limited (MCN) and MultiChoice Africa (MCA) in an effort to recoup 1.8 trillion in unpaid taxes.
MultiChoice Group is a South African entertainment conglomerate and the owner of popular television services DStv and GOtv. Its operations in over 20 other African countries account for approximately a third of the company's revenue, with Nigeria being the largest market.
According to a statement issued by FIRS's Director of Communications and Liaison, Abdullahi Ahmad, the company has consistently violated all agreements and undertakings with the tax agency. According to a Reuters report, MultiChoice also allegedly denied auditing access to their records.
“The companies failed to respond promptly to correspondence, lacked data integrity, and lacked transparency, as they repeatedly denied FIRS access to their records,” FIRS executive chair Muhammad Nami was quoted as saying. “In particular, [MultiChoice Nigeria Limited] has evaded providing accurate information to the FIRS regarding the number of its subscribers and revenue.”
Nami disclosed that the revenue service has now instructed banks to sweep the balances in MultiChoice Africa and MultiChoice Nigeria's accounts prior to conducting any other transaction on their behalf. “It is also requested that the FIRS be notified of any transactions that occur on the account prior to their execution, particularly transfers of funds to any of their subsidiaries.”
MultiChoice Group generates revenue primarily from two segments: South Africa and the rest of Africa. According to the FIRS chair, Nigeria accounted for 34% of the group's total revenue and the majority of revenue for MultiChoice Africa.
Meanwhile, MultiChoice's latest financial results for the fiscal year ended March 31 show that South Africa accounted for 64% of total revenue, while the rest of Africa accounted for 32%. The remainder came from the company's international technology segment.
MultiChoice is the latest South African company to be implicated in a massive tax evasion scandal in Nigeria. In 2018, the MTN Group's Nigerian subsidiary was ordered to pay $2 billion in taxes on equipment imports and payments to foreign suppliers from 2007 to 2017. Though the tax demand was ultimately abandoned.
In Conclusion
Nigeria is one of DStv's largest markets, and if the tax dispute is not resolved quickly, it could significantly disrupt MultiChoice's operations. The Nigerian subsidiary's statement in response to the FIRS allegation is expected to be released shortly.
