Lagos New Tax For Audio, Visual Contents More Like Extortion

Some weeks back, the  Lagos State Government announced a 5% tax for entertainment companies and other creatives involved in content production.

The government said the policy attracts a 5% tax for each content produced and sold within the state and is meant to shore up the state's revenue amid the COVID-19 pandemic.

To track the companies and artists,  the State Government directed all content producers to register their content within the next 30 days via the Lagos State Film and Video Censors Board (LSFVCB).

LSFVCB's Executive Secretary, Bamidele Balogun, said whoever fails to adhere to the directive will face sanctions by the board.

While it is still unclear the exact purpose of the levy and why it cannot be done with the income tax paid by practitioners, the government body claimed the exercise will assist in policy formation in funding the subsector, regarded as the heart of the country’s entertainment sector.

“Practitioners and stakeholders are also informed that henceforth, all audio and visual contents produced and sold within Lagos State shall attract the payment of five percent levy on each item," Balogun said.

“This exercise will, however, assist the Lagos State Government in policy formulation, with regard to planning and funding for the sector,” he explained.

Although it is not stated if skit makers will be affected, the new policy is expected to involve audio recordings, filmmakers, music video producers.

Why new policy seems like extortion

Globally, entertainers are one of the most paid individuals, having their sources of income ranging from performances, endorsement deals, appearance fees, royalties from image rights among other sources.

With payments coming from various sources, appropriate taxation has become potentially complicated in Nigeria.

Generally, income generated by individual entertainers in Nigeria can be categorized broadly as follows: income earned in Nigeria by resident entertainers (local appearances or performances), income from other jurisdictions, for instance, international performances.

The same income tax applicable to other individuals applies to entertainers, even before the introduction of the new policy now makes it mandatory that another 5% on all productions be paid to the state government.

With the advancement in technology, artists can share their works; be it video or audio from anywhere with the click of a button and such work can be enjoyed anywhere.

How they intend to make money, however, becomes a million-dollar poser.
Some artists put their productions out for free to promote themselves. This is especially for those who are still trying to make names for themselves in the industry.

With the high rate of piracy in the industry, a good share of intellectual work still goes to pirates, making it hard for young artists to break even.

A perfect picture of piracy is when different movie productions are contained in a CD, a menace worsened by an ever-hungry audience who are trying to cut costs.

Most top artists earn whopping amounts from the diaspora listening on international DSPs such as Spotify and Apple Music.

Burna Boy, for instance, has reportedly raked in millions of dollars from streaming in the past years. What about the up and coming ones?

PMAN Kicks 

Expectedly, the Performing Musicians Association of Nigeria (PMAN) has questioned the rationale behind the 5% on productions, describing it as an attempt to fleece entertainers.

The President of PMAN, Pretty Okafor also noted that the agency lacks the authority to impose such tax on artists.

“Why are they charging five percent? Does it even make sense?" he wondered. "The agency doesn’t even have the authority to tax anybody. Why would people just gather and decide to perpetrate fraud?”

'A Joke'

PMAN is not the only body kicking against the new move as the National Film and Video Censors Board (NFVCB) had also described the new directive by the state government as a "joke."

The Executive Director of the NFVCB, Adedayo Thomas, said while responding to a text message, that “It is a joke and a sign of idleness.”