The Federal Government is set to generate about ₦1.9 trillion from a new development levy in 2026, marking its first inclusion in the federal budget following Nigeria’s 2025 tax reforms.
According to figures in the 2026 Budget Call Circular, revenue from the levy is expected to grow to ₦2.41 trillion in 2027 and ₦3.13 trillion in 2028, making it one of the fastest-growing non-oil revenue streams over the medium term.
The levy, set at four per cent of companies’ assessable profits, was established under the Nigeria Tax Act 2025 and will take effect from January 1, 2026. It applies to companies liable for tax in Nigeria but excludes small businesses and non-resident companies meeting exemption thresholds. Assessable profit is calculated before deductions for capital allowances and loss relief.
The development levy replaces several previously separate charges, including the Tertiary Education Tax, the National Information Technology Development Agency (NITDA) levy, the NASENI levy, and the Police Trust Fund levy, simplifying compliance and reducing overlapping tax obligations.
Plans for spending the levy indicate that N120.75 billion will fund recurrent expenditure in 2026, while about ₦1.8 trillion is earmarked for capital projects. These allocations are projected to rise in line with growing revenue collections over the next two years.
Revenue from the levy will be distributed among seven key beneficiaries: the Tertiary Education Trust Fund (50%), the Nigerian Education Loan Fund (15%), NITDA (8%), NASENI (8%), the National Board for Technological Incubation (4%), the Defence and Security Infrastructure Fund (10%), and the National Cybersecurity Fund (5%). Each agency is required to report its income and expenditure to the National Assembly.
Over three years, from 2026 to 2028, the government expects to mobilise a total of approximately ₦7.07 trillion from the development levy. The newly established Nigeria Revenue Service will oversee collection, using digital systems and coordinated audits to enforce compliance.
Authorities say the levy is intended to streamline taxation, reduce compliance costs, protect small businesses, and strengthen Nigeria’s fiscal stability while ensuring predictable funding for education, technology, security, and infrastructure projects across the country.
