Court Rules NBC’s 2.5% Levy on Broadcasters Unlawful as MultiChoice Wins Major Case

The Federal High Court in Abuja has ruled against the National Broadcasting Commission (NBC), declaring its demand for broadcasters to pay 2.5% of gross annual income as an Annual Operating Levy (AOL) unlawful. This decision significantly alters the regulatory framework for Nigeria’s broadcasting industry. The court declared the provision in Section 2(10)(b) of the National Broadcasting Code, 6th Edition, “unfair, stifling, and unconscionable.”

MultiChoice Nigeria Ltd and Details Nigeria Ltd, operators of DSTV and GOtv, initiated the legal challenge, seeking to redefine the levy’s calculation based on net annual income rather than gross income. Justice James Omotosho ruled in favor of the plaintiffs, marking a significant victory for broadcasters in Nigeria.

What the Court Decided

Justice Omotosho’s verdict addressed two critical issues:

1. Levy on Net Income: The court replaced “gross annual income” with net annual income as the basis for calculating the levy. The judge emphasized that deducting business expenses before determining the levy aligns with global taxation practices.
   
   • “It would be unjust to impose the levy on gross income without accounting for the costs of production, salaries, rent, and other necessary expenses,” he stated.
2. Access to Financial Documents: The NBC’s demand for extensive financial records, including VAT remittance, bank statements, and audit journals, was curtailed. The court ruled that such documents can only be accessed through authorized agencies like the Federal Inland Revenue Service (FIRS).
   

Additionally, the court upheld a prior agreement between MultiChoice and NBC for a flat levy of ₦800 million per year from 2020 to 2023.

Implications of the Ruling

The judgment carries significant implications for both broadcasters and regulatory authorities:

• Economic Relief for Broadcasters: The shift from gross to net income reduces financial burdens on broadcasters, ensuring operational costs are considered before calculating levies.
• Stronger Legal Precedents: The ruling reinforces the need for clear, equitable regulations and highlights the importance of respecting binding agreements.
• Improved Regulatory Practices: By restricting NBC’s access to sensitive financial data, the court has emphasized the role of collaboration with other government agencies.

MultiChoice’s Legal Battles in Context

This ruling adds to MultiChoice’s ongoing legal challenges with Nigerian regulators and consumer groups. Earlier this year, the company faced fines and a one-month free subscription order over pricing disputes, which it successfully appealed.

The Federal High Court’s judgment not only strengthens MultiChoice’s position but also sets a precedent for fairness in Nigeria’s regulatory environment. As businesses and regulators adjust to this ruling, it underscores the importance of balancing oversight with operational realities for sustainable economic growth.