The Federal Government is projecting to earn about N1.9tn from the newly introduced development levy in 2026, the first year it will show up in the federal budget after Nigeria’s sweeping 2025 tax reforms.
Figures in the 2026 Budget Call Circular expected collections from the development levy at N1.899tn for 2026.
The projection shows collections are to rise to N2.41tn in 2027 and N3.13tn in 2028, making it one of the fastest-growing non-oil revenue lines over the medium term.
The levy is imposed at four per cent of companies’ assessable profits under the Nigeria Tax Act 2025, which was signed alongside three other tax reform laws on June 26, 2025, and is scheduled to take effect from January 1, 2026.
Assessable profit is defined as taxable profit before capital allowances and loss relief are deducted.
Under the law, the levy applies to companies chargeable to tax in Nigeria, excluding small companies and non-resident entities, which are exempted from Companies Income Tax, Capital Gains Tax, and the development levy once they meet the small-company thresholds.
A part of Section 59 of the Nigeria Tax Act 2025 reads, “(1) A development levy of four per cent is imposed on the assessable profits of all companies chargeable to tax under Chapters Two and Three of this Act, other than small companies and non-resident companies. (2) The Service shall collect the levy and pay it into a special account created for that purpose.”
