FG Targets N1.9tn From 2026 Development Levy
By Wellington Jopelo
The Federal Government is projecting to generate about N1.9 trillion from a newly introduced development levy in 2026, the first year the charge will be reflected in the national budget following major tax reforms.
Budget projections show that revenue from the levy is expected to reach N1.899 trillion in 2026, rise to N2.41 trillion in 2027, and increase further to N3.13 trillion in 2028, making it one of the fastest-growing sources of non-oil revenue.
The levy, fixed at four per cent of a company’s assessable profit, was created under the Nigeria Tax Act 2025 and is scheduled to take effect from January 1, 2026. Assessable profit refers to taxable income calculated before deductions such as capital allowances and loss relief.
Under the new law, the levy applies to companies operating in Nigeria, while small companies and non-resident firms remain exempt once they meet the required thresholds.
The development levy replaces several existing charges that were previously paid separately. These include the education tax, technology levy, science and engineering levy, and the police trust fund levy. The consolidation brings these payments under a single framework, reducing overlap and multiple collections.
Budget documents also outline how the funds will be used. In 2026, N120.75 billion is set aside for recurrent spending, while N1.8 trillion will be used for capital projects. Capital funding from the levy is projected to rise to N2.29 trillion in 2027 and N2.98 trillion in 2028.
Revenue from the levy will be shared among key institutions. The breakdown allocates 50 per cent to the Tertiary Education Trust Fund, 15 per cent to the Nigerian Education Loan Fund, eight per cent each to technology and engineering development agencies, 10 per cent to defence and security infrastructure, five per cent to cybersecurity, and four per cent to technological incubation programmes.
The law also makes clear that the levy will not apply to profits already assessed under hydrocarbon tax rules. Beneficiary agencies are required to submit spending plans to the National Assembly for approval.
Over the three-year period between 2026 and 2028, the government expects to raise about N7.07 trillion from the levy. Enforcement and administration will be handled by the Nigeria Revenue Service through improved digital systems and coordinated audits.
Tax authorities say the reform is aimed at simplifying payments, reducing compliance costs for businesses, and improving long-term economic stability, while protecting small enterprises from additional financial pressure.