Glasgow's rich and successful visual arts scene is threatened by a new licensing law which has been branded a "tax on creativity".

The city's artists, gallery owners, musicians and publishers yesterday hit out at changes to the Public Entertainment Licence law, which means exhibitions or public shows, even if they are free, need a licence costing from £124 to £7500.

The changes were made in the Criminal Justice and Licensing (Scotland) Act of 2010, which comes into force on April 1.

The free, ad-hoc, DIY nature of much artistic activity in the city – exemplified by pop-up shows, artist-run spaces, shows in artists' flats or semi-abandoned properties such as The Chateau which held the early gigs of Glasgow band Franz Ferdinand – will be ended by the new rules, a leading gallery director said.

Glasgow has become one of the most important centres for visual art in Europe, with Martin Boyce's recent win in the Turner Prize following wins for Susan Philipsz in 2010 and the painter Richard Wright in 2009.

It has been called The Glasgow Miracle but it is feared the licence system will undermine this. Hannah Robinson, of Mary Mary, who first exhibited the work of Turner Prize-nominated Karla Black, said: "This really feels like the end of that kind of pro-active, DIY scene.

"Over the years we have seen so many important exhibitions in flats and temporary spaces, from places such as Switchspace, to Martin Boyce in Toby Webster's flat, to Karla Black's work in my own flat.

"This will see artists graduate from the School of Art and leave. There are huge ramifications. It's a tax on creativity."

Alex Kapranos, singer of Franz Ferdinand, said on his Twitter site: "So, Glasgow council is trying to destroy any artistic life the city has? That's bright."

Events that need a licence include local festivals, free-entry museums and "exhibition spaces". However, Glasgow City Council says certain events are exempt, such as gala days, fetes, church halls and school halls.

It is a criminal offence to carry out an activity without a relevant licence, with the maximum penalty a fine of £20,000, six months' imprisonment or both.

A council spokesman said: "This is not just an issue for Glasgow as the change to the law applies across the country.

"We were very clear in our submissions that this change would lead to a wide range of free events to require a public entertainment licence."

Max Slaven, exhibitions co-ordinator at the David Dale Gallery in the city, said: "I see it as potentially very damaging for the arts. The changes also make it nearly impossible to legally hold flat exhibitions, one of the factors that makes Glasgow so interesting and diverse."

Mark Buckland, director of Cargo Publishing, which stages the city's Margins literary and music festival later this month, said the licence "demonstrates Glasgow City Council's philistine attitude".

He added: "At a time when the arts scene in Glasgow is thriving, the council is so desperate for money it can see no other method of fundraising than attacking the areas that make this an exciting cultural area."

A Scottish Government spokeswoman said: "If someone is thinking of holding a public event then they should discuss with their local authority licensing section as to whether it will require a public entertainment licence."