National Information Technology Development Levy (NITDL)

National Information Technology Development Levy (NITDL)

National Information Technology Development Levy NITDL

The NITDL was created as a way for companies to contribute towards the development of the technology sector in Nigeria. In this article, we delve into the intricacies of the NITDL, exploring its scope, impact, and the specific companies mandated to contribute.

What is the NIDTL?

The NTDL levy is an amount imposed on certain companies with the aim that these monies will drive the development of the Nigerian IT sector. For companies, it presents an opportunity to align their business strategies with national priorities, fostering a symbiotic relationship between corporate success and national development. By channelling funds directly into IT development, the levy catalyzes innovation, infrastructure enhancement, and the creation of a robust digital ecosystem.

Where does the NIDTL go?

The levy contributes directly to the National Technology Development Fund (NITDEF). The fund is established to support the development and growth of information technology in the country. The National Information Technology Development Fund is utilized for various initiatives aimed at promoting and enhancing the information technology sector in Nigeria. These initiatives may include:

  • IT Infrastructure Development: Investing in the development and improvement of information technology infrastructure across the country.
  • Capacity Building: Supporting educational and training programs to enhance the skills and capabilities of individuals in the IT sector.
  • Research and Development: Funding research initiatives to drive innovation and technological advancement in information technology.
  • Innovation and Entrepreneurship: Supporting startups and entrepreneurial ventures in the information technology space.
  • Regulatory Compliance: Ensuring that companies in the IT sector comply with relevant regulations and standards.
  • Cybersecurity Initiatives: Funding projects and programs aimed at strengthening cybersecurity measures in the country.

Tax Rate For NDTL

This levy is charged at the rate of 1% of Profit Before Tax. Only companies that have an annual turnover of ₦100 million and above are required to pay the levy.

Companies Required to Pay the NIDTL

  1. GSM Service Providers and all Telecommunication Companies
  2. Cyber Companies and Internet Providers
  3. Pension Managers and Pension-Related Companies
  4. Banks and other Financial Institutions
  5. Insurance Companies

Due Date for Filing NIDTL?

A company is expected to file these tax returns within 6 months, after the end of an accounting year.

Who Collects the NIDTL?

The Federal Inland Revenue Services (FIRS) is responsible for the collection of the levy.

Penalty for NIDTL Avoidance

Failure to pay the Levy at the due date shall attract a penalty of ten per cent (10%) and interest at the prevailing minimum rediscount rate of the CBN and if payment is not made within one month, enforcement shall take place.​

Is the NIDTL Tax Deductible?

Yes the NIDTL is an allowable deduction for income tax purposes

Final Thoughts

The NITDL Levy serves as a strategic financial mechanism to propel Nigeria’s technological advancement. By levying 1% on the profits of qualifying companies, it ensures a targeted contribution from entities poised to significantly influence the nation’s IT landscape.

FAQs

What is the NITDL Levy?

The NITDL Levy, governed by the National Information Technology Development Agency Act, is a financial charge imposed on specific companies in Nigeria to contribute to the development of the nation’s information technology sector.

Which companies are required to pay the NITDL Levy?

The specified companies mandated to pay the NITDL Levy include GSM Service Providers, Telecommunication Companies, Cyber Companies, Internet Providers, Pension Managers, Pension-Related Companies, Banks, other Financial Institutions, and Insurance Companies.

How is the NITDL Levy calculated?

The levy is charged at the rate of 1% of Profit Before Tax for companies with a turnover of N100 million and above. The calculation involves multiplying the Profit Before Tax by the levy rate of 1%.

What is the purpose of the NITDL Levy?

The primary purpose of the NITDL Levy is to provide financial support for the development of Nigeria’s information technology sector. The funds collected are intended to fuel innovation, infrastructure enhancement, and the overall growth of the IT landscape.

When is the due date for filing the NITDL Levy return and payment?

The due date for filing the return and payment of the NITDL Levy aligns with the company’s Income Tax due dates, i.e. within 60 days before the end of an accounting period.

What happens if a company fails to pay the NITDL Levy on time?

Failure to pay the levy by the due date attracts a penalty of ten per cent (10%) and interest at the prevailing minimum rediscount rate of the Central Bank of Nigeria (CBN). If payment is not made within one month, enforcement actions may take place.

How can companies ensure compliance with the NITDL Levy regulations?

Companies can ensure compliance by staying informed about the regulations, maintaining accurate financial records, and adhering to the specified due dates for filing returns and making payments.

Is the NITDL Levy a one-time payment, or is it recurring?

The NITDL Levy is recurring and is typically assessed annually. Companies meeting the turnover threshold of N100 million and above are required to pay the levy each.

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