Victory for broadcasters

The Federal High Court, Abuja, has nullified section 2(10)(b) of the National Broadcasting Code (6th Edition, 2016), which required…

The Federal High Court, Abuja, has nullified section 2(10)(b) of the National Broadcasting Code (6th Edition, 2016), which required broadcasters to pay 2.5% of their gross annual income as an annual levy. In a suit by MultiChoice Nigeria Limited and Details Nigeria Limited (GOTv), Justice James Omotosho ruled that the levy must be based on net annual income instead. The court also barred the National Broadcasting Commission (NBC) from demanding the plaintiffs’ VAT records, FIRS reports, bank statements, audit adjustment journals, trial balances, and general ledgers for income computation, limiting the NBC to relying on annual audited accounts.

The ruling represents a significant victory for equity in taxation and regulatory oversight in Nigeria. The court has prioritised fairness and operational realities by rejecting the requirement for broadcasters to pay 2.5% of their gross annual income as a levy and instead mandating that the levy be based on net annual income. This decision not only provides relief to the broadcasting sector but also challenges broader issues in Nigeria’s approach to revenue generation. The now-invalidated levy, calculated on gross income, imposed a disproportionate burden on broadcasters, regardless of their profitability. It reflects a broader trend in Nigeria’s fiscal policies, where the focus appears to be on aggressive revenue collection rather than fostering an enabling environment for economic growth. While the government’s drive to increase revenue is understandable, given the country’s fiscal pressures, the methods often come at the expense of the private sector. Businesses, especially in high-cost industries like broadcasting, operate in an environment fraught with challenges, including unreliable infrastructure, stiff competition, and high operational costs. Imposing levies disconnected from a company’s financial health only exacerbates these difficulties, stifling innovation and investment. The court’s decision also underscores the importance of curbing regulatory overreach. The National Broadcasting Commission (NBC) had sought broad access to sensitive financial records, including VAT records, FIRS reports, bank statements, and general ledgers. This demand exceeded what is reasonable for calculating levies and signalled a lack of trust in businesses and established tax authorities like the Federal Inland Revenue Service (FIRS). By limiting NBC’s access to audited accounts, the court has reaffirmed the principle of due process, ensuring that regulatory agencies operate within their defined mandates. This ruling provides an opportunity to reflect on Nigeria’s broader economic policies. Revenue generation, while critical, should be tied to creating value and fostering economic expansion. Taxation and levies must be structured to reflect a company’s ability to pay, ensuring businesses are not unfairly penalised. When businesses thrive, they create jobs, invest in innovation, and expand the economy, ultimately leading to higher tax revenues in the long term. By contrast, policies prioritising short-term fiscal gains over sustainability risk undermining the sectors that drive economic growth. In the broadcasting sector, easing the levy burden and ensuring fair regulatory practices could have transformative effects. Broadcasters would be better positioned to reinvest in local content, technology, and infrastructure, enhancing the industry’s competitiveness. At the same time, reducing administrative and financial pressures could attract more investment into the sector, boosting its contribution to the economy. The Nigerian government must recognise that fostering a vibrant economy requires more than aggressive tax policies. Strengthening institutions, streamlining regulatory frameworks, and delivering value to taxpayers are essential for building trust and encouraging compliance. Revenue collection should be a byproduct of economic growth, not a deterrent to it. For instance, broadcasters paying levies should see corresponding infrastructure and industry support improvements, creating a virtuous cycle of investment and growth.