AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
No. Section 59(1) of the Nigeria Tax Act 2025 imposes a development levy of 4% on the assessable profits of all companies "other than small companies and non-resident companies". A small company is one with turnover of ₦100 million or less and fixed assets below ₦250 million, and professional services firms cannot qualify, so a consultancy of any size pays the levy.
The development levy is one of the newer lines on a Nigerian company's tax bill. It came in with the Nigeria Tax Act 2025, effective 1 January 2026, and it applies on top of company income tax. For small companies the answer is short; for everyone near the threshold, the detail matters.
What the levy is
Section 59(1) of the Nigeria Tax Act 2025 reads: "A development levy of 4% is imposed on the assessable profits of all companies other than small companies and non-resident companies." Three points sit in that sentence:
- Rate: 4%.
- Base: assessable profits, not turnover. A company that makes no profit pays no levy.
- Who is out: small companies and non-resident companies.
"Assessable profits" is a defined step in the tax computation: profit after the tax adjustments for disallowed expenses. Ask your accountant which line of your computation is the levy base, because the levy and CIT may not be charged on exactly the same figure once capital allowances and losses are taken into account.
Are you a small company?
The 0% CIT rate in section 56(a) and the levy exemption in section 59(1) use the same small company test. Forvis Mazars (March 2026) and Techpoint Africa (May 2026) describe it as:
| Condition | Small company |
|---|---|
| Gross turnover | ₦100 million or less in the year |
| Fixed assets | Below ₦250 million (Forvis Mazars says not more than ₦250 million) |
| Type of business | Not a professional services provider |
PwC's May 2026 summary uses "and" in one place and "or" in another when describing the two thresholds, so check the wording in the Act's definition section with your adviser if you are close to either line. Mondaq's January 2026 summary of the reforms confirms that small companies are exempt from both CIT and the development levy. For the full conditions, see small company tax under the 2025 Act and the conditions you must keep meeting.
Worked examples
Examples only, with simplified figures.
| Company | Turnover | Small? | Assessable profit | Levy at 4% |
|---|---|---|---|---|
| Kano retailer | ₦80m | Yes | ₦9m | ₦0 |
| Abuja engineering consultancy | ₦60m | No (professional services) | ₦12m | ₦480,000 |
| Lagos distributor | ₦300m | No | ₦40m | ₦1,600,000 |
For the Lagos distributor, CIT at 30% on ₦40m of taxable profit (assuming the same base for simplicity) would be ₦12,000,000, so levy and CIT together come to ₦13,600,000. The consultancy shows why size alone does not decide: it is under ₦100m turnover but excluded by its activity.
Setting money aside
Where the CIT and levy bases line up, a company that is not small owes about 34 kobo of every naira of profit: 30 kobo of CIT and 4 kobo of levy. A simple habit is to move that share of each month's profit into a separate account, so the bill at filing time is already covered. Example: monthly profit of ₦2,000,000 means setting aside about ₦680,000.
Small companies still file
Being exempt from the levy does not remove the filing duty. Section 11(1) of the Nigeria Tax Administration Act 2025 requires every company to file a self-assessment return each year whether or not it is liable, and a small company may attach a statement of accounts attested by the taxpayer instead of audited statements. Late filing costs ₦100,000 for the first month and ₦50,000 for each later month (section 101).
When a small company grows
The test applies year by year. A company that crosses ₦100m of turnover, buys fixed assets above the limit or starts offering professional services leaves the small category for that year and starts paying the 4% levy as well as 30% CIT. Budget for both before you cross.
Common mistakes
- Charging it on turnover. The base is assessable profits. A loss-making year produces no levy.
- Applying it to a business name. Section 59 speaks of companies. A sole trader or business name owner pays personal income tax to the state instead; see how sole traders pay tax.
- Treating a group as one company. Each company files its own return and is tested on its own turnover and assets, so a group can contain small and non-small companies side by side.
- Assuming a foreign parent pays. Non-resident companies are excluded, but a Nigerian subsidiary is a resident company and is tested on its own figures.
- Forgetting the exclusion for professional services. Accountants, lawyers and consultants cannot use the small company route at any size.
What to check first
- Add up gross turnover for the accounting year, not just profit.
- Total the cost of fixed assets on your register.
- Check whether any of your income is professional services.
- If you are not small, set aside 4% of assessable profit for the levy on top of CIT.
- File the return either way.
Where Pryme fits
A company near the threshold can watch turnover month by month with the Finance agent, which prepares a running total for a person to review. The Compliance agent can hold the filing date and prepare reminders.
Questions people ask
What is the development levy in Nigeria?
A 4% levy on the assessable profits of companies under section 59(1) of the Nigeria Tax Act 2025, from 1 January 2026.
Do small companies pay the 4% development levy?
No. Small companies and non-resident companies are excluded by section 59(1).
Is the development levy charged on turnover?
No. It is charged on assessable profits, so a company with no profit pays no levy.
Does a consulting firm pay the development levy?
Yes, if it is a company. Professional services providers cannot be small companies, so the 4% levy applies whatever the turnover.
Sources
- Nigeria Tax Act 2025 (assented 26 Jun 2025), sections 8, 20, 21, 55, 56 and 59 · accessed Oct 2026
- Forvis Mazars: VAT and Nigeria's 2025 tax reforms, key business changes (16 Mar 2026) · accessed Oct 2026
- Techpoint Africa: Guide to the Nigerian tax reform Acts (5 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate income determination (reviewed 29 May 2026) · accessed Oct 2026
- Mondaq / WTS Blackwoodstone: The Nigerian tax reforms, what it means for MSMEs and individuals (22 Jan 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · 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.