Four separate levies used to sit on a company's profit before tax, each with its own small rate. From 1 Jan 2026, the Nigeria Tax Act 2025 folds all four into one.
The rate, and what it is charged on
The development levy is 4%, charged on assessable profits (before capital allowances and losses).
That base matters. It is worked out before capital allowances and losses are deducted, not after, so it does not track the same figure as your final taxable profit.
A levy calculated before those deductions usually produces a bigger number than one calculated after them. Budget for it using your assessable profit figure, not your tax-adjusted one.
The four levies it replaces
The tertiary education tax, NITDA levy, NASENI levy and Police Trust Fund levy all used to be charged on their own, each at its own rate, each worked out on profit before tax.
One levy, at one rate, now stands in for all four. A company that used to track four separate charges against four separate rates now tracks one.
Who pays it
All Nigerian companies except small companies. A small company sits outside the levy in the same way it sits outside company income tax and capital gains tax.
Commentary on the new law also places non-resident companies outside the levy, though the rule confirmed in the Act is the small-company exclusion above. If your company has no permanent presence in Nigeria, confirm your own position with an adviser rather than assume either way.
The levy sits on top of company income tax, not instead of it. A company that is not small pays both, on two different bases, in the same filing season.
Where the money goes
The levy is not paid into one general pot. 50% of it goes to the Tertiary Education Trust Fund, the single biggest share.
The rest is split across several other funds covering education loans, information technology development, engineering research and security infrastructure. None of this changes what a company actually pays. The rate and the base are the same regardless of which fund eventually receives a given naira.
A quick example
Take a company that is not small, with assessable profits of ₦20 million for the year before capital allowances and losses, for example. Its development levy for that year is 4% of that ₦20 million, on top of whatever company income tax it owes separately.
Common mistakes
- Assuming the levy disappeared because the old names did. The tertiary education tax and the others were folded in, not cancelled. The charge is still there, under a new name.
- Working it out on taxable profit instead of assessable profit. The base is set before capital allowances and losses, which usually makes it a larger figure.
- Assuming a small company pays a reduced levy. A qualifying small company pays none of it, not a lower rate of it.
For the wider law this levy sits inside, read the Nigeria Tax Act 2025 explained. For how it fits next to your company income tax rate, see CIT rates by company size, and browse the hub on the Nigeria Revenue Service (NRS), formerly FIRS, and Rev360 for the rest.