Under the settlement, MultiChoice Group will make a substantial tax payment totaling approximately $37.3 million. This development stems from actions initiated by the Nigerian Federal Inland Revenue Service (FIRS) in 2022, which included freezing MultiChoice Nigeria's accounts and issuing tax claims totaling 1.8 trillion naira ($1.27 billion) for the company's Nigerian operations, as well as a separate $342 million claim for value-added taxes.
Despite the initial contention, MultiChoice Group disclosed that the combined tax liability of 35.4 billion naira owed by MultiChoice Nigeria and MultiChoice Africa Holdings will be offset against previous security deposits and good faith payments made.
Earlier in March 2022, MultiChoice Nigeria and the FIRS had agreed to an out-of-court settlement regarding pending tax disputes, amounting to a $4.4 billion tax settlement. This agreement led to the withdrawal of all lawsuits by both parties, with the FIRS undertaking a forensic audit of MultiChoice's accounts to ascertain its tax obligations.
The history of the dispute dates back to April 2021 when the FIRS issued Notices of Assessment and Demand Notices amounting to N1.8 trillion on MultiChoice. This prompted MultiChoice to contest the assessments through the Tax Appeal Tribunal (TAT), resulting in a series of legal battles at both the TAT and the Federal High Court.
In August, a TAT court sitting in Lagos ruled that MultiChoice must pay 50% of the determined N1.8 trillion, representing the portion of tax payments the company was deemed to have failed to fulfill.
The agreement between MultiChoice and the FIRS signifies a significant step towards resolving the protracted tax dispute, marking a shift from confrontational legal battles to an amicable settlement process.
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