๐ ๐ ๐๐ฒ๐๐ฌ ๐๐.๐๐ญ๐ง ๐๐ซ๐จ๐ฆ ๐ง๐๐ฐ ๐๐๐๐ ๐๐๐ฏ๐๐ฅ๐จ๐ฉ๐ฆ๐๐ง๐ญ ๐ฅ๐๐ฏ๐ฒ
The Federal Government has projected to generate about โฆ1.9 trillion from a newly introduced development levy in 2026, marking its first appearance in the federal budget following the sweeping tax reforms enacted in 2025.
Figures contained in the 2026 Budget Call Circular obtained by Sunday PUNCH indicate that expected revenue from the levy will stand at โฆ1.899 trillion in 2026. The projection shows a steady rise to โฆ2.41 trillion in 2027 and โฆ3.13 trillion in 2028, positioning the levy as one of the fastest-growing non-oil revenue sources over the medium term.
The development levy is charged at four per cent of companiesโ assessable profits under the Nigeria Tax Act 2025. The law, signed on June 26, 2025 alongside three other tax reform legislations, is scheduled to take effect from January 1, 2026.
Assessable profit, as defined by the Act, refers to taxable profit before the deduction of capital allowances and loss relief. The levy applies to companies chargeable to tax in Nigeria, with exemptions granted to small companies and non-resident entities that meet the thresholds for exemption from Companies Income Tax, Capital Gains Tax and the development levy.
Section 59 of the Nigeria Tax Act 2025 provides that a four per cent development levy shall be imposed on the assessable profits of all taxable companies, excluding small and non-resident companies. It also mandates the relevant tax authority to collect the levy and remit it into a special account created for that purpose.
The new levy replaces several existing charges, including the Tertiary Education Tax, the National Information Technology Development Agency levy, the National Agency for Science and Engineering Infrastructure levy, and the Nigeria Police Trust Fund levy, which were previously imposed separately on overlapping profit bases.
Under the repealed laws, eligible companies were required to contribute one per cent of profit before tax to NITDA, 0.25 per cent to NASENI, and 0.005 per cent to the Police Trust Fund, in addition to the education tax. Collectively, these levies amounted to over four per cent of profit before tax.
In a recent analysis, PwC noted that the development levy consolidates the various sector-specific levies into a single charge, a move aimed at simplifying compliance for businesses while improving government revenue efficiency.
The Budget Call Circular also outlines how proceeds from the levy are expected to be deployed to support education, technology development, security funding and science and engineering infrastructure across the country.
