Nigerian CIT and Development Levy in 2026: NTA 2025 consolidation explained

What changed with Nigeria CIT and Development Levy under NTA 2025?

The Nigeria Tax Act 2025 (NTA 2025) introduced a landmark consolidation of corporate taxation, merging several levies into a unified framework. One of the most significant shifts affects how companies calculate and remit Corporate Income Tax (CIT) and the Development Levy. If you're managing finance or HR for a business operating in Nigeria or across pan-African subsidiaries, understanding this consolidation is essential—it directly impacts your bottom line and compliance obligations.

The most critical change: the NTA 2025 eliminated the previous fragmented approach to the Development Levy. Previously, organizations juggled multiple levy instruments under different acts. Now, the Development Levy sits integrated within the CIT framework under NTA 2025, with a clearer calculation methodology and unified filing timeline.

How CIT is calculated under NTA 2025

Standard CIT rate and taxable income

Under the NTA 2025, the standard Corporate Income Tax rate for large companies remains 30% of assessable profit. However, the definition of assessable profit has been tightened to ensure consistency across states and the federal level.

Assessable profit is now computed as:

• Gross income (all receipts from trading activities)
• Less allowable deductions (cost of goods sold, employee costs, utilities, rent, depreciation)
• Equals assessable profit before Development Levy adjustment

The NTA 2025 reinforces that all allowable deductions must align with Section 22 of the Income Tax Management Act (as reinforced in the 2025 consolidation), ensuring pan-African operations can claim only genuinely business-related expenses.

Small and medium-sized enterprises (SMEs)

A key relief under NTA 2025 is the preferential rate for SMEs. Enterprises with:

• Annual turnover below ₦25 million, or
• Employees below a defined threshold (typically 10–50, depending on sector)

qualify for a reduced CIT rate of 20% on assessable profit. This encourages formal registration and compliance among smaller pan-African operators.

Understanding the consolidated Development Levy

What is the Development Levy?

The Development Levy is a statutory contribution ostensibly earmarked for infrastructure, education, and economic development at the state level. Under pre-2025 law, companies faced multiple levy instruments: the Education Tax (2% of assessable profit), the Skills Development Levy, and sundry state-level levies.

The NTA 2025 consolidation merges these into a single Development Levy, assessed at a unified rate and collected alongside CIT.

Development Levy rate and calculation

Under NTA 2025, the consolidated Development Levy is:

• 0.5% of assessable profit for companies with assessable profit ≤ ₦1 million
• 1.0% of assessable profit for companies with assessable profit > ₦1 million

This replaces the previous 2% Education Tax and eliminates the dual-filing burden.

Example calculation:

If your company's assessable profit is ₦50 million:

• CIT @ 30% = ₦15 million
• Development Levy @ 1.0% = ₦500,000
• Total CIT + Development Levy = ₦15.5 million

Key consolidation benefits

1. Single assessment: One combined taxable income figure, eliminating disputes over Education Tax vs. CIT deductions.
2. Unified filing: Integrated return to the Nigeria Revenue Service (NRS) and relevant State Internal Revenue Service (SIRS).
3. Reduced compliance complexity: No more cross-referencing multiple levy legislation or managing separate payment schedules.
4. Clearer audit trail: The NTA 2025 framework mandates standardized documentation, making pan-African consolidated group reporting easier.

Exemptions and reliefs under NTA 2025

Wholly-owned subsidiaries of government

Organizations wholly owned by the federal, state, or local government remain exempt from CIT and Development Levy, provided they do not engage in commercial trading.

Not-for-profit organizations

Charitable, educational, and religious organizations recognized under NTA 2025 can apply for CIT exemption, subject to:

• Demonstrable charitable purpose (per NTA 2025, Part II)
• Annual compliance reporting to the NRS
• No distribution of surplus to members

Pioneer industries and Free Trade Zones

Enterprises granted Pioneer Status under the Industrial Development (Income Tax Relief) Act, as harmonized in NTA 2025, enjoy a 3-year CIT holiday followed by 5 years of 50% relief. Development Levy applies at the reduced rate (0.5%) during relief years.

Compliance and filing requirements

Annual filing timeline

All companies must file their CIT and Development Levy returns within 6 months of the close of the accounting year to the NRS and the applicable State Internal Revenue Service (SIRS). For calendar-year filers, this means a deadline of 30 June for the prior year.

Required documentation

• Audited financial statements (for large companies)
• Computation schedule showing gross income, deductions, and assessable profit
• Development Levy calculation worksheet
• Supporting invoices, contracts, and payroll records

Payment schedule

Development Levy and CIT must be remitted:

• Quarterly installments during the tax year (25% of estimated liability each quarter: March 31, June 30, September 30, December 31)
• Final adjustment on filing date if total paid is less than final liability

Impact on pan-African multi-subsidiary operations

For groups operating across Nigeria and neighboring jurisdictions, the NTA 2025 consolidation simplifies transfer pricing and intra-group charging. The unified Development Levy framework eliminates the previous risk of double levying on management fees or royalties.

However, transfer pricing documentation must still comply with OECD Transfer Pricing Guidelines (2022 update), which the NRS increasingly references in audits. If your pan-African structure includes cost-sharing agreements or shared service centers in Nigeria, ensure contemporaneous documentation reflects arm's-length principles.

Common compliance pitfalls in 2026

1. Conflating CIT and Development Levy calculations: Remember, Development Levy is not deductible from CIT; both apply to the same assessable profit.
2. Missing the quarterly payment deadline: Late payment attracts penalties (10% of unpaid tax) and interest (currently 10% per annum).
3. Misclassifying SME status: The ₦25 million turnover threshold is strictly applied; overstating eligibility invites surcharges.
4. Inadequate transfer pricing records: Multi-country groups face heightened NRS scrutiny; weak documentation triggers transfer pricing adjustments and penalties.

Next steps for 2026 compliance

Begin by conducting an internal CIT and Development Levy audit:

1. Reconcile prior-year Education Tax payments to ensure full credit under NTA 2025.
2. Update your payroll and HR systems to correctly capture employee deductions (e.g., Personal Income Tax, pension contributions) that do not affect assessable profit.
3. Engage your accountant to produce a draft assessable profit computation and Development Levy schedule.
4. Confirm with NRS and your state's SIRS whether any industry-specific reliefs or concessions apply to your operation.

The NTA 2025 consolidation is designed to reduce ambiguity and compliance cost. By aligning your finance and HR processes with the new framework—particularly the unified Development Levy methodology—you'll minimize audit risk and optimize cash flow across your pan-African footprint.

Ready to streamline your tax compliance? Contact the AnooreHR team to discuss how we support CIT and Development Levy reporting under NTA 2025, or sign up for a free trial to see how AnooreHR's integrated payroll and tax module simplifies Nigeria's consolidated levy framework.