Pay TV service provider, MultiChoice Nigeria, said it would begin the implementation of the new Value Added Tax, VAT, rate, which may lead to a hike in the prices of its DStv and GOtv packages.
Recall that the new VAT regime, which came into effect on February 1, raised the rate of VAT from five percent to 7.5 percent on goods and services.
Since that came effect four months ago, the Pay TV service provider has absorbed the 2.5 percent hike on behalf of its subscribers, an action that has kept that VAT rate at the pre-February rate of five percent.
According to reports, there is no way the pay television giants can continue to pay the difference between the old and the new rates for much longer, as this has impacted very negatively on its finances.
A source to Vanguard said: “Pay television service is not exempted from VAT and I want to believe that MultiChoice is the only company still charging the old VAT rate on its products and services. It is important to note that VAT is not part of the turnover of companies, which they, in fact, collect on behalf of the Federal Government and remit same on a particular date.
“There were speculations that the Federal Government would return to the old rate, but recent pronouncements by government officials that there would be no return to the old rate may have forced the company into a decision despite the best of intentions.
Reports also had it that the pay-television company is also planning to phase out some of its legacy packages on DStv and GOtv platforms and replace them with new ones to create capacity for new content additions and give them distinct Nigerian identities.