Nigeria’s sweeping tax reforms of 2025 are poised to introduce a massive new stream of government funding, with the recently signed Development Levy projected to generate nearly trillion in its first year. The levy, set to take effect on January 1, 2026, is designed to be one of the Federal Government’s most rapidly growing non-oil revenue sources over the medium term.
Details seen in the 2026 Budget Call Circular reveal aggressive financial targets for the new tax:
The Mechanism: A 4% Tax on Assessable Profit
The new tax is imposed at a rate of four per cent (4%) on companies’ assessable profits. The levy was introduced under the Nigeria Tax Act 2025, one of four reform laws signed on June 26, 2025.
According to Section 59 of the Act, assessable profit is defined as the taxable profit before deductions for capital allowances and loss relief are applied.
Who Pays the Levy?
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The levy applies to all companies chargeable to tax in Nigeria.
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The levy EXCLUDES small companies and non-resident companies, provided they meet the small-company thresholds, maintaining the government’s commitment to supporting micro and small enterprises (SMEs).
The Nigerian tax service is mandated to collect the levy and deposit the funds into a dedicated special account. This new revenue line underscores the federal government’s pivot toward strengthening fiscal stability through broader, domestic non-oil revenue generation.
