The development levy and the levies it replaced
How Nigeria's 4% development levy replaced tertiary education tax and the IT, NASENI and Police Trust Fund levies, who pays it and how to provide for it.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
A finance manager who has been preparing Nigerian company tax computations for a decade has a familiar list of extras to add after company income tax: tertiary education tax, the NITDA levy, the NASENI levy for some companies, and a sliver for the Police Trust Fund. Each had its own base, its own rate and its own history of arguments about who should pay.
From 2026 that list collapses into one line. The Nigeria Tax Act, 2025 imposes a single development levy on companies' assessable profits and folds the old earmarked levies into it. This article explains who pays the new levy, which levies it replaces, where the money goes, and how to provide for it in the year's figures.
One levy of 4% on assessable profits
Under the Nigeria Tax Act, 2025, a development levy of 4% is imposed on the assessable profits of all companies chargeable to tax under Chapters Two and Three of the Act, other than small companies and non-resident companies, and the Nigeria Revenue Service (NRS) collects it. The NRS describes it the same way on its own Development Levy page, which also sets out the earmarked levies it replaces and how the revenue is shared.
The base is assessable profit, the same starting figure used for company income tax. So the levy moves with the tax computation: a company whose assessable profit rises pays more levy, and one that makes a loss for tax pays none.
Who is outside it
Three groups do not pay:
- Small companies. The Act excludes them. Be careful with the definition. Two official texts of the 2025 tax Acts exist, the gazetted version and the National Assembly's own copy of January 2026, and some figures differ between them, including the turnover limit for a small company. Check your company's status with your adviser rather than assuming.
- Non-resident companies. They are excluded by the same section.
- Hydrocarbon profits. The NRS says the levy does not apply to assessable profits computed for Hydrocarbon Tax.
The NRS also says the levy is collected into a special account, which is why it appears as its own line in the computation rather than as part of company income tax.
The earmarked levies it replaces
The NRS says the development levy replaces several previously earmarked taxes, including the National Information Technology Development Fund (NITDF) levy and the Police Trust Fund levy. PwC's summary of Nigerian company taxation lists the levies replaced, with their old rates:
| Old levy | Old rate, as PwC lists it |
|---|---|
| Tertiary Education Tax | 3% |
| NITDA IT levy | 1% |
| NASENI levy | 0.25% |
| Police Trust Fund levy | 0.005% |
For a company that paid all four, the new single levy is simpler to compute. Whether it costs more or less depends on how the old levies were based and which of them the company actually paid, so compare your own figures rather than the headline rates. Note that the old levies remain relevant for periods before 1 January 2026, which stay under the repealed laws.
Where the money goes
The NRS says development levy revenue is shared as follows:
- 50% to the Tertiary Education Trust Fund
- 15% to the Nigerian Education Loan Fund
- 10% to the Defence and Security Infrastructure Fund
- 8% each to the NITDF and NASENI
- 5% to the National Cybersecurity Fund
- 4% to the National Board for Technological Incubation
None of this changes what a company pays. It explains why several former levy-collecting agencies no longer send their own demands: their funding now comes from the one levy the NRS collects.
What Achekam computes once its rules are approved
Achekam's Revenue Service Centre computes Nigerian company income tax together with the development levy and the minimum effective tax rate check, once its rules are approved. Every Nigerian tax figure in Achekam's rule book was seeded "under review", and Achekam computes nothing from a figure until an Achekam platform administrator approves it.
The small-company question is handled with the same caution. Achekam does not use the contested small-company turnover figure until one platform administrator chooses a candidate with a reason and a different administrator approves it. Until then the company's size class shows as undetermined, with what each candidate would give. That matters for the levy, because a small company pays none of it.
For the wider company tax picture, see company income tax from 2026, and for the rest of the reform, what the tax reform changed.
Budgeting for the levy in the year's tax provision
A levy you forget is a levy you pay from cash you had planned to spend elsewhere. In Achekam a business can set a budget per account and period and compare it with actual figures from its ledger, so the levy can sit in its own budget line next to company income tax.
A simple routine:
- Confirm the company is not small or non-resident, and record the reasoning with the evidence.
- Estimate assessable profit for the year from the management accounts each quarter.
- Provide for the levy at 4% of that estimate, in its own line beside company income tax.
- Exclude any hydrocarbon profits from the levy base, if the company has them.
- Retire the old levy lines in the chart of accounts for 2026 onwards, so nobody provides for both.
- Revisit the provision when the final tax computation is prepared.
When your accountant prepares the year's computation, the levy should be no surprise. It should be a figure you have been watching since the first quarter.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
