MultiChoice reaches tax settlement with Nigeria
Africa’s biggest pay-TV operator, MultiChoice, has reached a tax settlement with the Nigerian tax authority, bringing to an end a two-year tax dispute which had initially hit the share price.
MultiChoice will pay $37.3m to settle all matters in dispute, far less than the $4.4bn the tax receiver had originally demanded from MultiChoice Nigeria.
Nigeria’s federal inland revenue service had initially imposed a hefty tax bill in 2021, accusing MultiChoice of skipping taxes and denying auditors access to its servers. At the time, the quantum of the tax bill exceeded its market value, resulting in a drop in its share price, though it recovered after MultiChoice managed to get the ruling set aside.
Its shares were up 1.11% to R96.05 on Thursday, valuing MultiChoice at R42.5bn.
The group's stock has soared 26% in the last week, driven by a R105 per share buyout offer by French broadcast group, Canal+. Earlier in the week, the DStv operator rejected the offer saying it was too low.
Beyond MultiChoice, there has been a feeling in the market that multinationals, including several JSE-listed firms, are easy targets for governments looking for cash. This issue came to a head a year ago when international relations & co-operation minister Naledi Pandor came out in support of MTN, which was facing a R13bn tax bill in Ghana.
Vodacom was involved in a case in the Democratic Republic of Congo (DRC) in which the government said it is owed $243m in taxes. The disagreement is said to be related to an audit for 2016-2019.
Pandor said difficulties “ranging from unfavourable market conditions, inconsistent regulatory frameworks and inconsistent tax regimes” have led to disinvestment in some African markets by major companies such as Shoprite, Game, Mr Price, TFG (Foschini), Woolworths, Tiger Brands, Sasol Chemicals, Sasol Gas, Group Five, Murray and Roberts, Metrolife Group, Telkom, Southern Sun and Protea Group, “to name but a few”.
MTN has previously run into a tax dispute with the Nigerian authorities. The company was able to resolve an $8bn fine related to repatriated dividends in Nigeria, just one of the many cases it has had to deal with in the country.
A $2bn tax bill levelled against the company was revoked in 2020 after MTN contested it.
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