Before 2026, a profitable Nigerian company could face four separate levies on top of company income tax. The Nigeria Tax Act 2025 merged them into one: the development levy. It's simpler to understand, but it's charged on a wider base than many owners expect.
What is the development levy?
The development levy is a 4% levy on assessable profit payable by companies that are not small companies. It replaces:
| Old levy | Old rate (approx.) |
|---|---|
| Tertiary Education Tax (TETFund) | 3% of assessable profit |
| National Information Technology Development (NITDA) levy | 1% of profit before tax (larger companies) |
| NASENI levy | 0.25% of profit before tax (certain sectors) |
| Police Trust Fund levy | 0.005% of net profit |
Who has to pay it?
Every company that doesn't qualify as a small company under the NTA. A small company has turnover of ₦100m or less, fixed assets of ₦250m or less, and provides no professional services. Small companies are exempt. Check yours with the company income tax calculator.
How is it calculated?
Development levy = 4% × assessable profit.
Assessable profit is profit adjusted for tax purposes before deducting capital allowances and tax losses brought forward. That's the important detail: company income tax is calculated after those deductions, but the levy isn't. So a company with large capital allowances or past losses can owe the levy even when its company income tax bill is small.
Worked example
A software company (not small) reports:
| ₦ | |
|---|---|
| Assessable profit | 60,000,000 |
| Less capital allowances | −15,000,000 |
| Less losses brought forward | −10,000,000 |
| Taxable profit | 35,000,000 |
| Company income tax (30% × ₦35m) | 10,500,000 |
| Development levy (4% × ₦60m) | 2,400,000 |
| Total | 12,900,000 |
The levy is 4% of ₦60m, not ₦35m.
When is it paid?
With your annual company income tax return: within six months after your financial year end (30 June for a December year end), to the Nigeria Revenue Service. Late payment attracts a 10% penalty plus interest under the Nigeria Tax Administration Act 2025.
How should I plan for it?
- Estimate it quarterly alongside company income tax, and set cash aside monthly.
- Don't assume losses or capital allowances wipe out your tax bill. They reduce CIT, not the levy.
- If you're close to the small-company thresholds, track trailing 12-month turnover. Crossing ₦100m brings in both CIT and the levy.
BizBooks tracks your trailing turnover against the small-company limit on the Taxes page.
Frequently asked questions
What is the development levy rate in Nigeria?
4% of assessable profit for companies that are not small companies, from 2026 under the Nigeria Tax Act 2025.
Do small companies pay the development levy?
No. Small companies (turnover up to ₦100m, fixed assets up to ₦250m, no professional services) are exempt.
Is Tertiary Education Tax still payable?
No. Tertiary Education Tax and three other levies were replaced by the single development levy from 2026.
Is the development levy calculated on taxable profit?
No. It's calculated on assessable profit, before capital allowances and losses brought forward, so it can be higher than people expect.