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The short answer
The development levy is a 4% charge on the assessable profits of companies, imposed by section 59 of the Nigeria Tax Act 2025 from 1 January 2026. Small companies and non-resident companies do not pay it, it is collected by the Nigeria Revenue Service, and the proceeds are shared among TETFund (50%), the Nigerian Education Loan Fund (15%) and five other funds and agencies.
The levy in one table (as of October 2026)
- Rate
- 4% of assessable profits
- Legal basis
- Nigeria Tax Act 2025, Part X, section 59
- Who pays
- All companies chargeable to tax under Chapters Two and Three of the Act
- Who does not
- Small companies and non-resident companies
- Base excluded
- Assessable profits computed for hydrocarbon tax
- Collector
- Nigeria Revenue Service, into a special account
- Counts toward the 15% minimum ETR
- Yes, it is a covered tax under section 57(1)(b)
How the money is shared
Section 59(3) fixes the distribution. Each beneficiary must submit its income and expenditure to the National Assembly for appropriation (s.59(5)), and the Fourteenth Schedule governs a further split of the defence and security share.
| Beneficiary | Share of levy revenue |
|---|---|
| Tertiary Education Trust Fund (TETFund) | 50% |
| Nigerian Education Loan Fund | 15% |
| Defence and Security Infrastructure Fund | 10% |
| National Information Technology Development Fund | 8% |
| National Agency for Science and Engineering Infrastructure (NASENI) | 8% |
| National Cybersecurity Fund | 5% |
| National Board for Technological Incubation | 4% |
| Total | 100% |
What it replaced
The long title of the Nigeria Tax Act 2025 says it amends the Tertiary Education Trust Fund (Establishment, etc.) Act, the National Information Technology Development Agency Act and the National Agency for Science and Engineering Infrastructure Act, among others. Under the old laws those bodies were funded by separate charges on companies: the tertiary education tax, the NITDA levy and the NASENI levy. The development levy brings that funding into a single charge with one base and one collector, and the bodies now receive fixed shares of it.
Section 196 makes the changes explicit. It deletes sections 1, 2 and 3(3) of the TETFund Act, sections 12(2)(a) and 16 and the Third Schedule of the NITDA Act, section 20(2)(b)(i) and (ii) of the NASENI Act, and sections 44(2)(a) and (4) of the Cybercrime Act, the provisions under which the tertiary education tax, the NITDA levy, the NASENI levy and the cybersecurity levy were charged. The National Cybersecurity Fund now receives 5% of the development levy instead.
We have not reproduced the old rates here because they were set in laws that the 2025 Acts amend, and a side-by-side comparison would need the amended texts of each. If you are reconciling a 2025 accounting period against 2026, take advice on which charge applies to which period.
Petroleum and other specialised companies
Section 59(1) covers companies chargeable under Chapter Two (income of persons) and Chapter Three (income from petroleum operations). Section 59(4) then carves out the assessable profits computed for hydrocarbon tax, so a petroleum company pays the levy on its other assessable profits but not on the hydrocarbon tax base. Approved enterprises in free zones are taxed under the Second Schedule, which should be checked separately for their position.
The levy is a charge on profits, not on turnover. A company with an assessable loss for the year has no levy to pay for that year.
Assessable profits versus total profits
The levy uses assessable profits, not the total profits on which company income tax is charged. Assessable profits are worked out under Part V of Chapter Two before capital allowances are deducted; total profits under section 27 are assessable profits, plus chargeable gains, less losses and capital allowances. A company with large capital allowances can therefore owe little company income tax but still owe development levy.
Worked example (illustrative figures)
| Line | Amount (₦) |
|---|---|
| Assessable profits | 250,000,000 |
| Capital allowances | (150,000,000) |
| Total profits | 100,000,000 |
| Company income tax at 30% of total profits | 30,000,000 |
| Development levy at 4% of assessable profits | 10,000,000 |
| Total of the two | 40,000,000 |
The example assumes no chargeable gains, no losses brought forward and a company that is neither small nor in scope for the 15% minimum effective tax rate.
| Company profile (illustrative) | Small company? | Development levy |
|---|---|---|
| Turnover ₦80m, fixed assets ₦40m | Yes | Nil |
| Turnover ₦80m, fixed assets ₦300m | No (fixed assets above ₦250m) | 4% of assessable profits |
| Turnover ₦150m, fixed assets ₦20m | No (turnover above ₦100m) | 4% of assessable profits |
| Non-resident company with Nigerian income | Not relevant | Nil (excluded by s.59(1)) |
Practical points for finance teams
- Check small company status each year: turnover of ₦100 million or less and fixed assets of ₦250 million or less. A company that grows past either limit starts paying the levy.
- The levy is reported in the annual self-assessment return filed with the NRS, which is due within six months of the year end (NTAA s.11).
- Non-resident companies are outside the levy, but their Nigerian permanent establishments still compute company income tax under the Act.
- Groups in scope for the minimum effective tax rate should include the levy when testing whether covered taxes reach 15% of net income.
- Payment follows the general rule in NTAA s.49: tax is due by the filing date, in one sum or instalments. Unpaid amounts attract a 10% penalty and interest at the CBN monetary policy rate plus a spread set by the Minister (NTAA s.65).
- Keep the computation that splits assessable profits from total profits; it is the figure the NRS will check first in an audit of the levy.
Related: company income tax rates, tax calendar and small company tax.
How we put this together
We read the gazetted texts of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 (Official Gazette No. 117, Vol. 112, dated 26 June 2025) section by section. The Nigeria Revenue Service website lists these Acts on its laws page, but its topic pages load in the browser and could not be read by our tools, so we worked from copies of the Gazette hosted by a third party and checked figures against the section and schedule numbers quoted here. Regulations, practice notes and orders issued after the Acts may change how a rule applies; where something depends on an order or regulation we say so. The example uses invented figures.
Questions people ask
What is the development levy in Nigeria?
A 4% levy on the assessable profits of companies under section 59 of the Nigeria Tax Act 2025, collected by the Nigeria Revenue Service from 1 January 2026.
Does a small company pay development levy?
No. Small companies, meaning turnover of ₦100 million or less and fixed assets of ₦250 million or less, are excluded, as are non-resident companies.
Has the development levy replaced tertiary education tax?
The Nigeria Tax Act 2025 amends the TETFund, NITDA and NASENI Acts and gives those bodies fixed shares of the development levy, bringing their company-based funding into a single charge.
Is development levy charged on total profits or assessable profits?
On assessable profits, which come before capital allowances, so it can be larger than expected for capital-intensive companies.
Sources
- Nigeria Tax Act, 2025 (Act No. 7), Official Gazette No. 117, Vol. 112, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Tax Administration Act, 2025 (Act No. 5), Official Gazette No. 117, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Revenue Service: Laws and regulations · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.