A Federal High Court judge in Abuja has struck down a section of the National Broadcasting Code that required broadcasters to pay 2.5% of their Gross Annual Income as an Annual Operating Levy. The ruling came in a case filed by MultiChoice Nigeria Ltd and Details Nigeria Limited (GO TV) against the National Broadcasting Commission (NBC).
Justice James Omotosho delivered the judgment, ordering that the levy should be calculated based on Net Annual Income instead of Gross Annual Income. The court also prohibited NBC from demanding various financial documents from the companies, limiting their access to only annual audited accounts.
During the case, the plaintiffs’ counsel, Moyosore Onigbanjo, pointed out that the term “gross annual income” was not clearly defined in the NBC Code or its previous editions. The NBC’s counsel argued that the existing agreement between the parties was not binding.
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Drawing from his background as an economics teacher, Justice Omotosho emphasized the importance of calculating levies based on net income. He highlighted that businesses have significant expenses that should be deducted before determining taxable income. The judge compared this approach to tax practices in the United States and the United Kingdom, where taxes are imposed on profits after expenses.
The court ruled that the existing provision was unconscionable and potentially stifling to broadcasters. Justice Omotosho criticised NBC’s claim of being entitled to N4 billion, noting that the commission provided no substantial evidence to support this demand.
Regarding a previous agreement to pay a flat rate of N800 million as an Annual Operating Levy, the judge declared the agreement binding on both parties. He issued a perpetual injunction preventing the NBC from sanctioning, fining, or suspending the plaintiffs’ license contrary to the court’s judgment.
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