Development Levy in Nigeria: 4% Rate, Who Pays, Where It Goes
A plain guide to the 4% development levy: who pays it, how it is worked out and where the money goes.
Based on the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, in force from 1 January 2026.
In 30 seconds
A development levy of 4% is charged on the assessable profits of companies. Small companies and non-resident companies do not pay it (section 59).
The Nigeria Revenue Service collects the levy. The money is shared between seven funds and agencies, and half of it goes to the Tertiary Education Trust Fund.
Development levy in Nigeria: who pays it
The levy applies to companies chargeable to tax under Chapters Two and Three of the Act. Chapter Two covers income tax. Chapter Three covers petroleum operations.
Two groups are left out. Small companies do not pay it. Non-resident companies do not pay it (section 59(1)).
The levy is also not charged on assessable profits that are computed for hydrocarbon tax (section 59(4)).
How the levy is worked out
The base is the company's assessable profits. The rate is 4%.
In the Act, assessable profits are worked out first (section 22). Losses and capital allowances come off later to reach total profits (section 27). On the Act's wording, the levy uses the earlier figure. Confirm the treatment with the NRS before you file.
| Example | Amount |
|---|---|
| Assessable profits | N200,000,000 |
| Development levy at 4% | N8,000,000 |
Where the money goes
The Nigeria Revenue Service pays the levy into a special account (section 59(2)). Section 59(3) then shares it as follows.
| Fund or agency | Share |
|---|---|
| Tertiary Education Trust Fund | 50% |
| Nigerian Education Loan | 15% |
| National Information Technology Development Fund | 8% |
| National Agency for Science and Engineering Infrastructure | 8% |
| National Board for Technological Incubation | 4% |
| Defence and Security Infrastructure Fund | 10% |
| National Cybersecurity Fund | 5% |
Each fund and agency must send its income and expenditure to the National Assembly for appropriation (section 59(5)).
How the defence share is divided
The Fourteenth Schedule divides the 10% defence share between eleven bodies. The last column shows each body's share of the whole levy.
| Agency | Share of the defence fund | Share of the whole levy |
|---|---|---|
| Defence Headquarters | 8% | 0.8% |
| Nigerian Army | 20% | 2% |
| Nigerian Navy | 12.5% | 1.25% |
| Nigerian Airforce | 12.5% | 1.25% |
| ONSA and Counter-Terrorism Center | 6% | 0.6% |
| Nigeria Police Force | 10% | 1% |
| Police Trust Fund | 8% | 0.8% |
| Department of State Security | 9% | 0.9% |
| Nigerian Security and Civil Defence Corps | 5% | 0.5% |
| Nigerian Forest Security Service | 5% | 0.5% |
| Defence Intelligence Agency | 4% | 0.4% |
A slip in the gazette. Paragraph 1(2) of the Fourteenth Schedule says the money comes from the development levy imposed in section 160. The levy is in section 59. Section 160 is in the surcharge chapter. Read the reference as section 59.
Development levy vs tertiary education tax and the old levies
Before 2026, companies paid separate levies for education, information technology and science infrastructure. Section 196 deletes those provisions from the laws behind them. The NTA collects one levy instead and shares it out by formula.
TETFund, which used to collect the tertiary education tax, now receives 50% of the levy (section 59(3)(a)).
How it fits with company income tax
- The levy is separate from the 30% income tax in section 56.
- It counts as a covered tax for the 15% minimum effective tax rate (section 57(1)(b)). See the company income tax guide.
- A company that stops being small starts paying it.
Filing and paying
The Nigeria Revenue Service collects the levy (section 59(2)). Returns and due dates follow the Nigeria Tax Administration Act. Check the current timetable on the NRS portal.
Common mistakes
- Charging the levy on a small company.
- Applying it to profits already taxed as hydrocarbon tax.
- Missing it when turnover or fixed assets pass the small-company limits.
- Leaving it out of the covered taxes in the 15% floor test.
Frequently asked questions
What is the development levy rate in Nigeria?
4% of assessable profits (section 59(1)).
Who pays the development levy?
Companies chargeable to tax under Chapters Two and Three of the Act, except small companies and non-resident companies (section 59).
Does a small company pay the development levy?
No. Small companies are excluded (section 59(1)). The turnover limit for a small company is under review. See the company income tax guide.
Who gets the money from the development levy?
TETFund gets 50%. The Nigerian Education Loan gets 15%. The IT Development Fund and NASENI get 8% each. The incubation board gets 4%. The Defence and Security Infrastructure Fund gets 10%. The Cybersecurity Fund gets 5% (section 59(3)).
Does the levy apply to oil and gas companies?
It applies to companies taxed under Chapter Three, except on assessable profits computed for hydrocarbon tax (section 59(4)).
Which older levies did it replace?
The Act deletes the education tax, information technology levy and science infrastructure levy provisions from their parent laws (section 196).
Is the development levy the same as the tertiary education tax?
No. The levy is a single 4% charge. The Act deletes the education tax provisions from their parent law (section 196). TETFund now receives 50% of the levy (section 59(3)(a)).
Related guides
Study this in the ICAN notes
These free ICAN exam notes cover the same topic, with worked examples and past-question practice.
- Nigeria Tax Act 2025: overview of the new tax laws
- Which law applies: periods before 2026 and the Nigeria Tax Act 2025
- Principles of company income tax: rates, small companies and exemptions
The sections, word for word
These are the sections this guide relies on, as published in the Official Gazette. Open any one to read it.
Section 59 Development levy
Official NRS sources
The Fourteenth Schedule percentages are taken from the gazette; the last column is our arithmetic. Source for the Act: Nigeria Tax Act, 2025 (Act No. 7 of 2025), Official Gazette No. 117, Lagos, 26 June 2025. General information, not tax or legal advice.