By Mfonobong Ukpe

There has been an uproar within the Entertainment Industry (particularly the members of the Musical Society of Nigeria and Performance Musicians Associations of Nigeria), following a notice issued by the Lagos State Film and Video Censors Board (the “Board”) on the 12th day of August 2020 stating that all audio and visual contents produced and sold within Lagos State will attract the payment of a 5% levy on each item.

In that notice, the Board also added that practitioners involved in the production, sale, distribution of audio and visual products are to register their products with the Board within 30 days from the date of the directive. In a statement by the Executive Secretary of the Board, the exercise will assist the Lagos State Government in policy formulation with respect to planning and funding of the creative and entertainment sector.

Industry players will be required to register their products through the Board’s authorised Agents. The Executive Secretary also advised that stakeholders and practitioners adhere to the directive as violators of the registration will be sanctioned by the Board.

However, it is understood that tax is the lifeblood of a nation. The Social Contract from which taxation derives strength, do not campaign to persecute her parties through unnecessary or double taxes/levies. Under the Nigerian tax system, one transaction (product or service) mostly generates various categories of tax liabilities namely; Income Taxes (Personal Income and Company Income Taxes), Value Added Tax, Stamp Duties (in some cases), etc.

In light of the above, the legality of the imposed 5% levy on each content item and the powers of the Board to impose such taxes is in question and in our opinion, unconstitutional.

The proposed 5% although knavishly lesser than the 7.5% Value Added Taxes, takes the form of a Value Added Tax which amounts to a Double Taxation. As stipulated under Item 59, Exclusive Legislative List of the Constitution of the Federal Republic of Nigeria, 1999 as amended, the Federal Legislature is exclusively charged with the responsibility to impose such taxes and the Value Added Tax Act had been enacted by the National Assembly for that purpose.

We anticipate that the Board will take a second look at their decision, follow the rule of law, rescind this 5% tax imposition and present innovative business environment for the Entertainment Industry.