Justice James Omotosho of the Federal High Court in Abuja has ruled to strike 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 (AOL).
The ruling followed a suit filed by MultiChoice Nigeria Ltd and Details Nigeria Limited (GO TV) against the National Broadcasting Commission (NBC).
In his judgment delivered on Wednesday, Justice Omotosho ordered that the provision be amended to reflect a levy based on ‘Net Annual Income’ rather than ‘Gross Annual Income.’ The court also prohibited the NBC from requesting certain financial documents, such as VAT remittances, bank statements, or trial balances, from the plaintiffs, except for their annual audited accounts as outlined in the NBC Code. The judge clarified that the NBC could only access additional financial documents through agencies like the Federal Inland Revenue Service (FIRS).
The case involved legal arguments over whether the NBC had the authority to demand such financial documents and whether the term “gross annual income” in the NBC Code was fair and equitable. The plaintiffs’ counsel, Moyosore Onigbanjo, SAN, argued that the term was undefined and that the waiver agreement between MultiChoice and the NBC to pay a flat rate of N800 million from 2020–2023 should be binding.
NBC’s counsel, Victor Ogude SAN, countered that the agreement was not binding on the NBC and that the commission was entitled to the full amount payable.
Justice Omotosho, drawing from his background in economics, explained that businesses like the plaintiffs must account for significant expenses before determining their net income. He stated that imposing the levy on gross income, which does not account for such expenses, would be unfair. He noted that globally, tax levies are typically applied to net income, not gross income, citing practices in the United States and the United Kingdom.
The judge further emphasized that the NBC’s claim of N4 billion from the plaintiffs, based solely on the potential increase in subscription fees, was unsupported by evidence. He also ruled that the plaintiffs had consistently paid their AOL, and the NBC had failed to challenge these payments.
Regarding the waiver agreement, Justice Omotosho affirmed that it was legally binding, and both parties must honor it. He also issued a perpetual injunction barring the NBC from demanding additional sums from the plaintiffs for the years in which they had already paid the levy, as well as from sanctioning or suspending their licenses contrary to the court’s decision.
This ruling is seen as a significant victory for broadcasters, particularly MultiChoice, in their legal battle with the NBC.
