Justice James Omotosho of the High Court in Abuja has struck down Section 2 (10) (b) of the National Broadcasting Code (6th Edition), which required broadcasters to pay 2.5% of their “Gross Annual Income” as an Annual Operating Levy.
This decision followed a lawsuit brought by MultiChoice Nigeria Ltd and Details Nigeria Limited (GO TV) against the National Broadcasting Commission (NBC).
Delivering judgment on Wednesday, Justice Omotosho ordered the replacement of the term “Gross Annual Income” with “Net Annual Income” for the calculation of the levy. The court also prohibited the NBC from demanding various financial documents from the plaintiffs, such as VAT remittance, reports from the Federal Inland Revenue Service (FIRS), bank statements, audit adjustment journals, trial balances, and general ledgers, except for the annual audited accounts stipulated in the NBC Code.
The judge stated that the NBC could only access other financial documents of MultiChoice through agencies such as the FIRS.
In the suit, the plaintiffs’ counsel, Moyosore Onigbanjo, SAN, sought clarification on whether the NBC had the authority to demand financial documents other than the annual audited accounts. He also challenged the fairness of the term “Gross Annual Income” in the NBC Code, noting that “income” was not defined in the Code or the NBC Act of 2004.
Onigbanjo further argued that an agreement between the plaintiffs and NBC to pay a flat rate of ₦800,000,000 as an Annual Operating Levy for the years 2020–2023 was binding, while the NBC’s counsel, Victor Ogude, SAN, countered that the agreement was invalid as it exceeded the acting Director-General’s authority. Ogude also defended the NBC’s right to the full amount payable.
Justice Omotosho, drawing on his background in economics, ruled that expenses should be deducted before the levy is calculated. He emphasised that net income represents a company’s actual profit after deducting all expenses and noted that levying broadcasters on their gross income was unjust, as it failed to consider their operational costs.
He added that this position aligns with international tax practices, citing examples from the United States and the United Kingdom, where taxes are based on net profit.
“Section 2 (10) (b) of the National Broadcasting Code, 6th Edition, which demands 2.5% of Gross Annual Income as an Annual Operating Levy, is unconscionable, unfair, and oppressive,” Omotosho declared.
The judge further noted that the plaintiffs had presented credible evidence of having consistently paid their levy, which the NBC did not dispute. He dismissed the NBC’s claim that it was owed ₦4 billion, stating it lacked evidence and failed to account for increased production costs or expenses.
On the matter of the agreement, the court ruled that once parties had entered into a binding agreement, neither could unilaterally abandon it due to unfavourable terms. Omotosho declared the agreement between the plaintiffs and the NBC regarding the flat rate binding and restrained the NBC from demanding additional payments for the years covered.
Finally, the judge issued a perpetual injunction barring the NBC and its agents from imposing sanctions, fines, or suspensions contrary to the court’s judgment.