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Nigeria Government Plans 25% Allocation of Development Levy to Student Education Loan Fund

Olusola Blessing by Olusola Blessing
October 17, 2024
in Education, News
0
Nigeria’s Student Loan Scheme May Include Private Institutions Within Three Years — NELFUND
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The Federal Government has announced plans to allocate 25% of revenue from a new development levy to the Student Education Loan Fund in 2025. This initiative is part of a broader tax strategy outlined in a 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,” dated October 4, 2024.

 

Under this proposed legislation, companies, except for small and non-resident entities, will be liable for a development levy on their accessible profits. The levy will be set at 4% for the 2025 and 2026 tax years, reduced to 3% from 2027 to 2029, and further decreased to 2% from 2030 onwards.

The bill states, “A development levy is imposed on the assessable profits of all companies chargeable to tax under chapters two and three of this Act, other than small companies and non-resident companies.” The revenue generated will be directed into a special account designated for educational funding.

Revenue Distribution Strategy

The allocation plan emphasizes educational funding, with the Student Education Loan Fund receiving 25% of the levy revenue in 2025 and 2026. This allocation will increase to 33⅓% between 2027 and 2029, and from 2030 onwards, the fund will receive 100% of the levy revenue. This shift illustrates the government’s commitment to enhancing student support through loan schemes.

 

The Tertiary Education Trust Fund (TETFUND) will receive 50% of the levy revenue for the first two years, increasing to 66⅔% from 2027 to 2029. However, from 2030, TETFUND will no longer receive any allocation from the levy.

Additionally, the National Information Technology Development Fund will receive 20%, while the National Agency for Science and Engineering Infrastructure will get 5% of the levy revenue during the initial two years. Both funds will be excluded from the distribution from 2027 onwards.

The bill also specifies that profits subject to the hydrocarbon tax will be exempt from the development levy. By 2030, the entirety of the revenue from the development levy will be dedicated to the Student Education Loan Fund, positioning it as a crucial element of educational support in Nigeria.

 

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