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Nigeria: Companies to contribute 0.005% of net profit to police trust fund

Nigeria: Companies to contribute to police trust fund

New law—the Nigeria Police Trust Fund (Establishment) Act, 2019—establishes the Nigeria police trust fund. The fund will be used to support police training, equipment purchases, and other police personnel matters.


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Funds for the police trust fund will come from various sources including a levy of 0.005% of the net profit of companies operating in Nigeria.

KPMG observation

The police trust fund levy will be added to the taxation of Nigerian businesses that, in addition to their regular 30% corporate income tax, are currently subject to a levy equal to 2% of their assessable profits as a tertiary education tax and, depending on their industry, 1% of their profit before tax as an information technology development agency levy (payable by companies in the financial and information and communications technology industries), and 1% of their contract value as a content development fund levy (payable by companies operating in the oil and gas industry).

The police trust fund levy law does not include any provision for the tax-deductibility of the mandatory levy payable by companies operating in Nigeria. This is a departure from the arrangement under similar legislation, for which the mandatory contributions are tax-deductible. Another challenge is the term “net profit” is not defined by the legislation. Thus, could this net profit be computed using a company’s profit before interest, taxes, depreciation and amortization; profit before tax; or profit after tax? Also, there is uncertainty as to whether the term “companies operating in Nigeria” includes non-resident companies conducting business in Nigeria (especially in the oil and gas industry).

Read a September 2019 report [PDF 177 KB] prepared by the KPMG member firm in Nigeria

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