The Nigerian Federal Government has unveiled a significant legislative plan concerning taxation and education funding through a new bill. Titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating to Taxation and Enact the Nigeria Tax Act,” the document was dated October 4, 2024, and outlines a comprehensive strategy for tax allocation beginning in 2025. A pivotal aspect of this bill is the establishment of a development levy, from which 25 per cent of the revenue will be earmarked for the Student Education Loan Fund. This initiative underscores the government’s commitment to enhancing education funding and providing a sustainable framework for student loans.
Under this proposed taxation framework, the development levy will be applicable to companies that are liable for taxation, explicitly excluding small and non-resident entities. In the initial phase covering the 2025 and 2026 tax years, the levy is set at four per cent of assessable profits. This rate will then decline to three per cent for the years 2027 through 2029 and further reduce to two per cent starting in 2030. The bill specifies that the collected levy will be deposited into a dedicated account for the Student Education Loan Fund, marking a vital commitment to educational initiatives by the federal government.
The allocation strategy outlined in the bill prioritizes the funding for educational purposes, with an increasing emphasis on the Student Education Loan Fund over time. In the early years, specifically 2025 and 2026, 25 percent of the revenue will directly support this fund. In subsequent years—2027 to 2029—this allocation will rise to 33⅓ percent, culminating in a complete dedication of 100 percent of the levy revenue to the Student Education Loan Fund beginning in 2030. This strategic shift highlights the federal government’s long-term vision to support students through targeted loan programs, thereby addressing pressing issues related to educational financing.
The bill also outlines the financial distribution to other educational entities. During the initial two years, the Tertiary Education Trust Fund (TETFUND) will receive 50 per cent of the levy revenue, which will elevate to 66⅔ per cent from 2027 to 2029. However, starting from 2030, TETFUND will no longer benefit from the levy, indicating a decisive pivot towards prioritizing direct student loans over institutional support. Additionally, the National Information Technology Development Fund will receive 20 per cent and the National Agency for Science and Engineering Infrastructure will receive 5 per cent of the levy revenue during the 2025 and 2026 years, but these allocations will cease from 2027 onwards.
This legislative framework also clarifies exceptions within the development levy’s application. Specifically, profits that are subjected to the hydrocarbon tax will be exempt from the levy, ensuring that businesses in the oil sector are not burdened by this new educational funding initiative. This exemption aligns with strategic economic considerations, recognizing the unique challenges faced by the hydrocarbon industry.
Overall, the bill represents a critical initiative within Nigeria’s ongoing efforts to reform its tax policies and reallocate resources towards education. By committing substantial portions of tax revenue to the Student Education Loan Fund, the government is taking a proactive step towards investing in the future of its youth and fostering higher education. The gradual increase in funding to this fund highlights an acknowledgment of the importance of educational support and a response to the growing need for accessible financing options for students in Nigeria. The overall structure of the bill reflects a well-thought-out approach to balancing institutional funding with direct support for students, making it a cornerstone of Nigeria’s educational policies in the coming years.
