This decision came in response to a lawsuit filed by MultiChoice Nigeria Ltd and Details Nigeria Limited (GO TV) against the National Broadcasting Commission (NBC).
In his ruling delivered on Wednesday, Justice Omotosho directed that the term be amended to “Net Annual Income” instead of “Gross Annual Income.” He further prohibited the NBC from requiring the plaintiffs to submit their VAT remittance, FIRS reports, bank statements, audit adjustment journals, trial balances, and general ledgers for the purpose of determining their annual income, except for the annual audited accounts as outlined by the NBC Code.
The judge specified that the NBC could only obtain additional financial documents from MultiChoice through agencies like the Federal Inland Revenue Service (FIRS).
The plaintiffs’ attorney, Moyosore Onigbanjo, SAN, sought clarification on whether the NBC had the authority to request financial documents beyond the annual audited accounts and questioned the fairness of the term “gross annual income” as defined in the NBC Code. Onigbanjo also asked the court to determine if the agreement between the plaintiffs and the NBC to pay a flat rate of N800,000,000 as the Annual Operating Levy for the years 2020–2023, including previous years, was enforceable.
In response, NBC's counsel, Victor Ogude SAN, contended that the agreement was not binding, arguing that the acting Director-General of the NBC who entered into the agreement exceeded his authority and maintained that the NBC was entitled to the full levy.
In his ruling, Justice Omotosho underscored the substantial capital and operational costs associated with running a business like MultiChoice, asserting that it is only just for these expenses to be deducted prior to the payment of the Annual Operating Levy. He pointed out that net income, which reflects business expenses, represents the true profit after deductions, and this is the amount that should be subject to taxation.
“The appropriate and lawful basis for imposing a levy is the net income,” Omotosho stated, noting that this practice is consistent with international tax standards. “In the United States, corporations are taxed at a flat rate of 21% on profits after expenses. Likewise, the UK imposes a 25% corporation tax on company profits.”
Justice Omotosho further explained that gross income fails to consider essential business expenditures such as production costs, rent, and employee salaries, emphasizing that only net income should be used for levy calculations. He deemed the request for 2.5% of Gross Annual Income as unreasonable and unjust.
Moreover, Omotosho highlighted that MultiChoice had consistently paid the Annual Operating Levy, and the NBC had not contested these payments. The court also rejected NBC’s claim for N4 billion, citing a lack of supporting evidence.
Regarding the agreement between the plaintiffs and the NBC, Justice Omotosho ruled that the commitment to pay N800,000,000 as the Annual Operating Levy for the specified years was binding on both parties, thereby preventing the NBC from seeking any additional payments for those years. He also issued a permanent injunction barring the NBC from imposing sanctions, fines, or suspending the plaintiffs’ license related to the matters discussed in the case.