Technology: DStv, GOtv hike price as MultiChoice implements 7.5% VAT

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.

Pay TV service provider MultiChoice Nigeria said it will start enforcing the new Value Added Tax, VAT, rate, which could lead to a hike in its DStv and GOtv packages rates.

Since coming into effect four months ago, MultiChoice 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.

From the information gathered, 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.

The source said: "Pay TV service is not excluded from VAT and I would like to think that MultiChoice is the only business that still charges the old rate of VAT on its goods and services. It is important to note that VAT is not part of corporations' turnover, which they simply receive on behalf of the Federal Government and remit on a given date.

The source added that MultiChoice may have waited for four months to effect the new rate, in the hope that, as widely speculated, the Federal Government might revert to the old rate before the end of the first quarter of the year.

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.

Information reaching us is 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.