Earlier this month, Multichoice Zim announced that subscribers would have to pay more for all DStv packages due to VAT adjustment.
For many people there was confusion since Value-Added-Tax actually fell from 15% to 14.5%. If VAT paid is actually lower why are you paying more?
Well, Multichoice has explained this saying before 2020 the VAT did not apply to Pay-TV service at all and now that it has been effected in such a manner that their business is affected they are passing on the cost to viewers.
With the introduction of VAT on externally sourced pay-TV services by the Zimbabwean government from January 1 this year, DStv subscriptions are subject to VAT in terms of Finance Act 3 of 2019.
Although the introduction of VAT became effective on 1 January 2020, this was absorbed by MultiChoice for the first five months of the year.
The business will start charging VAT on its services from 1 June 2020, so it may continue injecting this much-needed revenue into the local economy. This comes at a time when current macro-economic factors require financial authorities to collect revenue from a range of sources, especially when the ongoing COVID-19 crisis is making unprecedented demands on national exchequers.
MultiChoice has long been sensitive to Zimbabweans’ special economic circumstances and as a result did not increase subscription prices for any of its DStv products for the past four years, freezing prices for three of those years and reducing fees in in November 2016 and September 2017. However, in order to remain sustainable as a business, the price adjustments are necessary to ensure we continue to deliver the best local and international content, innovative technology and excellent service to Zimbabwean DStv viewers.
The result of the mandatory tax and marginal price adjustment is an increase to subscribers in the monthly cost of all DStv bouquets, as well as for add-on services such as DStv Indian and DStv Portuguese and also for DStv packages for corporates and the hospitality industry.
The broadcasting company also noted that on some packages they didn’t pass the 14.5% onto customers. Premium subscribers seem to be paying slightly above 14.5% with their $12 increment coming out to 15.7%. It seems these customers might be the ones making it possible for those in lower bouquets to pay less.