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Federal High Court Strikes Down NBC’s 2.5% Gross Income Levy on MultiChoice
Justice James Omotosho of the Federal High Court 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 judgement followed a suit filed by MultiChoice Nigeria Ltd and Details Nigeria Limited (GO TV) against the National Broadcasting Commission (NBC).
Delivering judgement on Wednesday, Justice Omotosho, ordered that the provision be struck down and replaced with ‘Net Annual Income’ instead of the existing ‘Gross Annual Income.’
The court also barred the National Broadcasting Commission (NBC) from demanding the plaintiffs’ VAT remittance, FIRS reports, bank statements, audit adjustment journals, trial balances, and general ledgers for the purpose of computing the plaintiffs’ annual income, other than the annual audited accounts of the companies as stipulated in the NBC Code.
The judge stated that the NBC can only access the other financial documents of MultiChoice through sister agencies such as the Federal Inland Revenue Service (FIRS).
In the suit, the plaintiffs’ counsel, Moyosore Onigbanjo, SAN, sought several reliefs, including a determination of whether the NBC had the authority to demand any financial documents other than the annual audited accounts.
He also sought clarification on whether the term “gross annual income,” as used in the NBC Code, was fair and equitable.
“Income, as provided by the NBC Code 6th Edition, is not defined, nor is it defined in any previous editions or in the NBC Act of 2004,” the counsel submitted in court.
Onigbanjo also asked the court to determine whether the waiver or agreement between the plaintiffs and the NBC to pay a flat rate of N800,000,000 (Eight Hundred Million Naira) as Annual Operating Levy for the years 2020–2023, including certain previous years, was binding on both parties.
Counsel to the NBC, Victor Ogude SAN, argued before the court that the agreement was not binding on the NBC, as the NBC’s acting Director-General who entered into the agreement on its behalf acted beyond his powers.
He contended that the NBC was entitled to the full amount payable.
Ogude also urged the court to uphold the NBC’s oversight role over MultiChoice and Details Nigeria.
Delivering his verdict on Wednesday, Justice Omotosho, said with his experience as a trained economics teacher, running a business like the one operated by the plaintiffs requires significant capital and expenses. It is only fair, he said, that these expenses be deducted before the Annual Operating Levy is paid.
He stated that net income is the actual profit after subtracting all business expenses, adding that the taxable amount cannot be determined when calculating gross profit but should be based on net profit.
The judge emphasized that the Annual Operating Levy charged by the NBC is a form of tax imposed on broadcasters.
He held that it would be unjust to impose it on their gross income.
“The proper and lawful income to impose a levy on is the net income,” he said, adding that this aligns with tax laws and global best practices. “In the United States, for instance, companies pay a flat rate of 21% on their profits, determined after all expenses have been deducted. Similarly, in the United Kingdom, a 25% corporation tax is imposed on company profits.”
“From this Court’s knowledge of economics, gross income implies all money that accrues to a person or business within a specific time. This gross income typically does not account for company expenditures such as production costs, rent, vendor payments, staff salaries, taxes, and other costs. It is only after all these payments are made that the company determines its profit, known as net income.”
“Consequently, this Court holds that Section 2 (10) (b) of the National Broadcasting Code, 6th Edition, which demands 2.5% of Gross Annual Income from broadcasters as an Annual Operating Levy, is unconscionable, unfair, and stifling to the plaintiffs,” Omotosho ruled.
Furthermore, Omotosho noted that the plaintiffs had provided credible and documentary evidence showing they had faithfully paid their Annual Operating Levy (AOL) without fail, and the defendant did not challenge these documents.
He said the NBC’s claim that it was entitled to N4 billion, as stated in its letter dated August 15, 2023, was unsupported by any evidence.
“Simply basing its claim on the fact that the plaintiffs increased their subscription fees is grossly insufficient. First, there is no evidence before the court that subscription fees were increased. Second, the defendant failed to consider that the plaintiffs may have increased their production costs or incurred additional expenses. This Court refrains from speculation as the defendant has invited it to do,” Omotosho added.
Regarding the agreement, Omotosho ruled that when parties express their intention and enter into a binding agreement, neither party is allowed to abandon the agreement simply because one or more of its terms are unfavorable.
The judge declared that the agreement between the defendant and MultiChoice, or the waiver on the payment of N800,000,000 (Eight Hundred Million Naira) throughout their current “DTH license”, is binding on both parties.
He also restrained the NBC from demanding any additional sum from the plaintiffs as AOL for the years in which they have already made payments.
He issued a perpetual injunction restraining the NBC, its servants, agents, or privies from sanctioning, fining, or suspending the plaintiffs’ license, contrary to the court’s judgment on the issues raised.
No fewer than 952 Nigerians have been killed by Lassa fever, cholera, measles, diphtheria, and yellow fever in 2024.
This is according to data from the National Public Health Institute, Nigeria Centre for Disease Control and Prevention (NCDC).
A breakdown of the data showed that as of week 52, the country recorded 9,685 suspected cases of Lassa fever, 1,187 confirmed cases, and 191 deaths across 28 states, and 138 local government areas.
As of October, the centre recorded 14,237 suspected cases of cholera, 378 deaths in 36 states, and 339 LGAs.
The centre also recorded 18,187 suspected cases of measles, 9,330 confirmed cases, and 73 deaths in 36 states and the Federal Capital Territory across 751 LGAs as of October 2024.
Comparatively, suspected cases of cholera in the current year increased by 220 per cent compared to what was reported as of week 39 in 2023. Likewise, cumulative deaths recorded have increased by 239 per cent in 2024.
As of September, the NCDC recorded 12,085 suspected cases of diphtheria, 7,784 confirmed cases, and 309 deaths in 21 states across 170 LGAs.
The NCDC also recorded 1,484 suspected cases of Mpox, 124 confirmed cases, across 28 states, and the FCT as of November 3, 2024.
As of September, the country recorded 2,248 suspected cases of yellow fever, 18 confirmed cases, from 592 LGAs in 36 states and the FCT, and one death.
Taiwo Oyedele, chairman, Presidential Advisory Committee on Fiscal Policy and Tax Reform (PACFTR) has said that contrary to speculations, individuals earning about N1.7 million or less per month will pay lower Pay as You Earn (PAYE) tax under the proposed Tax Amendment Bills before the National Assembly.
Besides, workers earning the new minimum wage and slightly more will also be fully exempted from tax obligations.
Addressing various tax issues on X, formerly Twitter, Oyedele said these thresholds will result in over 90 per cent of workers in the public and private sectors paying lower taxes while high income earners will pay slightly more in a progressive manner up to 25 per cent for the ultra-high net worth individuals.
His explanation came against the backdrop of general concerns that workers might pay more under the proposed tax reform initiatives of the federal government.
According to him, planned changes to the current tax table of personal income brackets and rates was to discourage arbitrage in some cases between the two income tax regimes.
He said the current tax table was introduced in 2011, stating that due to high inflation and lack of review, the structure has resulted in “fiscal drag” where many low income earners have been pushed to the top tax bracket over time.
This, he said, meant that an individual earning just N400,000 a month was paying the same top marginal income tax rate as a wealthy individual earning about N20 million per month.
“Therefore, the tax table has become regressive rather than progressive, as it was originally designed.
“Also, the current personal income tax regime does not encourage formalisation given that the effective top tax rate on companies is nearly double that of enterprises, which also encourages arbitrage in some cases between the two income tax regimes.
“Hence, the proposed changes seek to address these issues and simplify the system by incorporating current reliefs and allowances into the bands and rates to achieve an overall lower effective tax rate for the majority of workers,” Oyedele said.
Further addressing concerns over taxation of workers’ income in the proposed regulation, he clarified that apart from the N800,000 per annum, which was exempted from tax, there was a rent relief of up to N200,000 per annum, which together will exempt individuals earning up to N1 million per annum (about N83,000 per month).
He said: “This is particularly beneficial to low income earners. Also, the new tax bands and rates have been designed to avoid a situation where individuals earning slightly more than the exemption threshold are taxed to an extent that makes them worse off than a person whose income is within the exemption threshold.
“For example, a person earning N30,000 per month is exempt from tax while a person earning N30,001 per month will pay about N500 leaving the latter with a net of N29,500 which is N500 worse than the person earning N30,000.
“Under the tax bills, this problem has been addressed, as everyone will be eligible to the first tax-free bracket.”
He also revealed that statutory deductions, including pension and National Housing Fund contributions, were still applicable under the new tax bills.
According to him, “These are contributions under the National Housing Fund, National Health Insurance Scheme, Pension Reform Act, interest on loans for developing an owner-occupied residential house, annuity or premium paid for life insurance, and rent relief up to N200,000 per annum.”
He said while part of the objectives of tax reforms was simplification, the impact of the Consolidated Relief Allowance (CRA) and Personal Relief had been incorporated into the tax table such that the overall goal of exempting low income earners and reducing taxes for middle income earners was achieved.
Addressing worries over the removal of CRA and personal relief, which seemingly amounted to giving a relief with one hand and taking it back with the other, Oyedele pointed out, “By integrating the reliefs into the tax brackets and rates, many taxpayers with basic education would be able to calculate their taxes with little or no assistance thereby achieving the dual objectives of lower tax burden and tax simplification.”
On suggestions that the tax rate for the second band seemed quite steep, moving from zero per cent to 15 per cent, he said, “By comparison, the second band under the bills, which is to be taxed at 15 per cent, is currently being taxed at a marginal rate of 21 per cent even after all reliefs and allowances.
“So, while the 15 per cent may appear steep from zero per cent for the first band, it is lower compared to the current tax table.
“The real impact for a person earning about N3 million per annum equivalent to the aggregate of the first and second brackets is a lower effective tax rate of 10 per cent compared to about 12 per cent under the current tax table.”
Federal government will establish a national credit guarantee company in May to lend to businesses and individuals, according to President Bola Tinubu.
Bola Tinubu
Tinubu in an speech on Wednesday, said that “To achieve this, the federal government will establish the National Credit Guarantee Company to expand risk-sharing instruments for financial institutions and enterprises.
He said the company would partner with government institutions such as the Bank of Industry, Nigerian Consumer Credit Corporation, the Nigerian Sovereign Investment Agency, and Ministry of Finance Incorporated, as well as the private sector and multilateral institutions.
“This initiative will strengthen the confidence of the financial system, expand credit access, and support under-served groups such as women and youth. It will drive growth, re-industrialisation, and better living standards for our people,” Tinubu said.
Eight months ago, Tinubu launched the Nigerian Consumer Credit Corporation, to enhance access to credit to employed Nigerians.
The implementation of the programme was planned in stages, beginning with Federal civil service employees and now the general public.
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