A Nigerian tax tribunal cleared MultiChoice, Africa’s biggest pay-TV provider, to appeal a disputed $4.4 billion (R64 billion) tax bill in the country.
The South African company’s local unit was allowed to proceed after paying a $19.4 million (R280 million) deposit, according to a statement on Wednesday, confirming an earlier Bloomberg report.
The ruling came as somewhat of a reprieve for the Johannesburg-based firm, as the West African nation’s tax authorities said in August it would have to pay half the claim, or $2.2 billion, to argue its case. The shares slumped on that news, but have since recovered to near three-month highs.
The shares traded 0.1% higher at the close in Johannesburg.
MultiChoice is challenging the penalty imposed by the Federal Inland Revenue Service, which said the owner of the DStv service skipped taxes and denied auditors access to its servers. The R64 billion claim is well above the company’s market value of about R55 billion.
Appealing a major tax claim in Nigeria worked for MTN, which owns Nigeria’s biggest mobile-phone provider and has battled several multi-billion dollar disputes with the country’s authorities. Those included a $2 billion tax bill in 2018, which was eventually dropped more than a year later.
Nigeria is seeking to boost tax compliance to fix revenue shortfalls, Finance Minister Zainab Ahmed said this month. The country is aiming for a revenue-to-GDP ratio of 15% by 2025, up from 8% currently. Rising debt-service costs, which now account for about 70% of government revenue, are constraining what the government can spend on key infrastructure.
Bloomberg – With assistance from Loni Prinsloo.
