ITF contribution in Nigeria: who pays and how it is calculated

The Industrial Training Fund (ITF) levy is the statutory payroll item employers forget most often, because it is paid once a year rather than every month. It is also the only one that can be partly refunded. This guide explains who pays, how to work it out, when it is due and how to claim training costs back.

The ITF levy at a glance

What employers pay, when, and what they can claim back.

5+EmployeesOr fewer staff with turnover of ₦50m or more

1%Of annual payrollBasic pay, allowances and other entitlements

1 AprilDeadlineFor the previous year's payroll

5%Late penaltyFor each month or part of a month

50%Maximum refundFor training under the Fund's schemes

₦500kFine for training failuresFirst breach by a company; ₦1m after

Who must pay

The ITF (Amendment) Act 2011 widened the levy. Before 2011 it applied to employers with 25 or more staff. It now covers two groups:

Employers with a “minimum of 5 employees or a turnover of N50 million and above per annum.”

ITF (Amendment) Act 2011, as summarised by Mondaq

So a firm with four employees but turnover of ₦60 million a year still pays. The test is either condition, not both.

The levy is an employer contribution. It must not be deducted from employees’ pay or shown as a deduction on payslips.

How to calculate it

The levy is 1% of total annual payroll. Payroll for this purpose covers basic pay, allowances and other entitlements paid to employees, including staff who work outside Nigeria.

Employer	Annual payroll	ITF levy (1%)	Maximum refund (50%)
5 staff on an average of ₦150,000 a month	₦9,000,000	₦90,000	₦45,000
20 staff on an average of ₦300,000 a month	₦72,000,000	₦720,000	₦360,000
4 staff on ₦150,000 a month, turnover ₦60m	₦7,200,000	₦72,000	₦36,000
120 staff on an average of ₦400,000 a month	₦576,000,000	₦5,760,000	₦2,880,000

Use gross pay, not basic salary. Working the levy out on basic alone understates it.

When it is due

The levy for a year is due not later than 1 April of the following year. The levy on 2026 payroll is due by 1 April 2027.

Late payment attracts a penalty of 5% of the outstanding amount for each month or part of a month. On the ₦720,000 levy in the example, the penalty adds up quickly:

Late penalty on a ₦720,000 ITF levy

5% of the unpaid levy for each month or part of a month late, assuming simple monthly charging.

₦36,0001 month late

₦108,0003 months late

₦216,0006 months late

₦432,00012 months late

Show the numbers

Item	Value
1 month late Paid in April after the 1st	₦36,000
3 months late Paid by early July	₦108,000
6 months late Paid by early October	₦216,000
12 months late Paid a year late	₦432,000

Source: Workstat calculation from the ITF (Amendment) Act 2011 penalty rate.

A year’s delay costs more than half the levy itself. The Fund can also sue to recover unpaid contributions, underpayments and penalties.

Claiming back up to 50%

The levy is meant to pay for training. Employers that train their staff in line with the Fund’s reimbursement schemes can claim back part of what they paid. The 2011 amendment cut the maximum refund from 60% to 50% of the amount paid.

From levy to refund

1. Register

   Register the business with the ITF, which records your staff numbers and payroll.

2. Pay on time

   Pay 1% of the previous year’s payroll by 1 April.

3. Train and document

   Run training that meets the Fund’s scheme rules, and keep records of who was trained, on what and at what cost.

4. File the returns

   Submit the returns and evidence the Fund asks for, accurately. False returns are an offence.

5. Claim

   Apply for reimbursement, up to 50% of the levy paid.

The requirements for training to qualify are set by the Fund and change from time to time. Check the current scheme rules with the ITF before you plan a training budget around a refund.

Other duties and offences

The Act also expects employers to train staff adequately and to accept students for industrial attachment. Failing to do so, or making false returns, is an offence with fines that rose sharply in 2011.

Who	First breach	Each later breach
Company	₦500,000	₦1,000,000
Chief executive, secretary or principal officer	₦50,000 or two years’ imprisonment	Two years’ imprisonment without the option of a fine

These offences sit apart from the late-payment penalty, which applies to any unpaid levy.

Where ITF fits in payroll

The ITF levy is one of three employer costs on top of salary, alongside the employer’s 10% pension and the 1% NSITF contribution. Unlike the other two, it is paid once a year on the whole year’s payroll. See statutory payroll deductions for all five items side by side, and NSITF contribution for the monthly 1% that is easily confused with ITF.

ITF checklist

ITF checklist

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Check

• Five or more employees, or turnover of ₦50 million or more
• Business registered with the ITF

Every month

• 1% of gross payroll set aside for the annual levy
• Training records kept for every course and attendee

Every year

• Levy on the previous year’s payroll paid by 1 April
• Returns submitted with accurate payroll and training figures
• Reimbursement claimed for qualifying training

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