Netflix, iROKOTV Won’t Pay Newly Imposed 5% Tax and Sanwo-Olu is Backing Them

The recent directive imposing a five percent tax on video streaming platforms domiciles in Nigeria’s commercial hub, Lagos, has backfired.

The State Governor, Babatunde Sanwo-Olu has suspended the Executive Secretary of the Lagos State Film and Video Censors Board (LSFVCB), Bamidele Balogun, who ordered the tax imposition.

In a letter dated August 31, 2020, and addressed to the major players in the sector, iROKOTV and Netflix Nigeria, the digital platforms were mandated to pay five percent levy on all visual and audio content.

“We hereby request for immediate payment of the five per cent levy on all audio and visual content produced, sold, distributed, marketed, exhibited, streamed, downloaded and shared across all physical and digital platform situate, lying and being within Lagos State”, the directive read in part.

The state government however countered the move in a statement on Friday, Sept. 4, describing it as insensitive, especially amid the harsh economic realities occasioned by the coronavirus pandemic.

A spokesman for the government, Gbenga Omotosho, who is the state Commissioner for Information and Strategy, said “There is no levy on audio and visual contents of all physical and digital platforms in Lagos State”.

He said the ill-conceived directive was issued without the government’s authorization.

Omotosho added, “The Executive Secretary, Lagos State Film and Video Censors Board, Mr. Bamidele Balogun, is said to have announced a five per cent levy.

“The government hereby dissociates itself from the said announcement in the media. The Executive Secretary, who was not authorised to make such an announcement, has been suspended, pending an administrative enquiry.”

It would seem that Balogun did not only display brazen insubordination by issuing the five percent tax directive, the decision also contravenes an existing court order.

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In June 2020, Justice Chuka Obiozor of a Federal High Court had barred the LSFVCB from taxing film and video producers, stating that it would amount to double taxation as another body, the National Film and Video Censors Board already collects a levy from them.

It appears multiple government agencies are in a race to milk the billion-dollar creative industry in Nigeria that has grown exponentially despite the lack of government support.

Barely one week ago, the Managing Director of iRoko TV, Jason Njoku, announced that the company will layoff 150 staff as it plans to stop investing in Nigeria and focus on its international business that generates 80 percent of its revenues. He described the Nigerian market as hostile.

A seemingly frustrated Njoku did say that the decision to deprioritize his company’s investment in Nigeria is largely because of the new Broadcast Code recently released by the National Broadcasting Commission (NBC).

The code seeks to end the exclusivity of original content and compel Pay TV and video-on-demand platforms to sub-license content to other broadcasters at prices that will be regulated by the Commission.

Since this move will put the investment of Pay TV owners at risk, most of the companies, are reportedly planning to do the same as iROKOTV – to stop investing in local content.

It was gathered that major content service providers like Africa Magic, Netflix and Amazon are already mapping out their Plan B routes, which will unlikely be in favour of Nigeria.