The Federal High Court in Abuja has nullified a provision in the National Broadcasting Code that required broadcasters to pay 2.5% of their Gross Annual Income as an Annual Operating Levy (AOL). Justice James Omotosho ruled on Wednesday that the levy must be based on Net Annual Income, considering business expenses, rather than gross income.
The judgment came in response to a suit filed by MultiChoice Nigeria Ltd and Details Nigeria Limited (operators of GOtv) against the National Broadcasting Commission (NBC). The plaintiffs had challenged the fairness of the levy and the NBC’s demand for extensive financial documents beyond their annual audited accounts.
Justice Omotosho ordered the NBC to replace the gross income provision with net income in its code and prohibited the commission from requesting financial records such as VAT remittances, FIRS reports, and bank statements for calculating the levy. He stated that the NBC could only access such documents through relevant government agencies like the Federal Inland Revenue Service (FIRS).
In his judgment, the court emphasized that running a broadcasting business involves significant expenses, which must be deducted to determine net income. “The taxable amount cannot be based on gross profit but should reflect net profit,” the judge said. He added that the levy, akin to a tax, should align with global best practices, citing examples from the United States and the United Kingdom where taxes are applied to company profits rather than gross earnings.
“The provision in Section 2 (10) (b) of the National Broadcasting Code, 6th Edition, demanding 2.5% of Gross Annual Income, is unconscionable, unfair, and stifling to the plaintiffs,” Justice Omotosho ruled.
The court also addressed a previous agreement between MultiChoice and the NBC, under which the company agreed to pay a flat rate of ₦800 million as AOL for 2020–2023. NBC’s counsel, Victor Ogude SAN, had argued that the agreement was non-binding, claiming the acting Director-General exceeded his authority in signing it. However, Justice Omotosho upheld the agreement, ruling that neither party could unilaterally abandon it.
He further restrained the NBC from demanding additional payments for years covered by the agreement and issued an injunction preventing the commission from imposing sanctions, fines, or suspending the plaintiffs’ licenses in violation of the judgment.
The court also dismissed NBC’s claim of being entitled to ₦4 billion, noting a lack of evidence to support it. Justice Omotosho criticized the NBC for failing to consider the plaintiffs’ operational costs or prove its assertion that subscription fees had increased.
“The defendant cannot rely solely on assumptions. Business realities, such as rising production costs, must also be considered,” the judge stated.
The ruling is seen as a landmark judgment in defining fair regulatory practices in Nigeria’s broadcasting industry, ensuring that levies are equitable and do not hinder business operations.
