The Nigerian Government has reduced the interest rate applicable to late payment of taxes, with the new regime taking effect from October 1, 2026.
The measure is contained in the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, under Section 65 of the Nigeria Tax Administration Act, 2025.
Under the new order, interest on tax payable in naira will be charged at the Central Bank of Nigeria’s Monetary Policy Rate, MPR, plus one percentage point, subject to a floor based on the yield on 364-day Treasury Bills.
This represents a reduction from the previous five-percentage-point spread. For taxes payable in foreign currency, the applicable rate will be the Secured Overnight Financing Rate, SOFR, plus six percentage points.
The Federal Ministry of Finance says the new framework is designed to align the cost of late tax payment more closely with prevailing market rates, while providing greater certainty and consistency for taxpayers.
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Speaking on the measure, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said “Tax that is due belongs to the public. When it is paid late, Government may have to borrow to fill the gap, and the cost falls on everyone.”
Oyedele said the new framework would tie the cost of late payment to prevailing market rates, ensuring that taxpayers would not find it cheaper to delay their tax obligations than to borrow from the market.
He added that the measure would also provide greater certainty for taxpayers across the country.
“Every taxpayer, whether dealing with the Nigeria Revenue Service or a State revenue service, will know the rate in advance, see it published every month, and be charged in the same way.”
Under the new arrangement, the applicable rate will be determined monthly, based on the last business day of the preceding month, and published by the Nigeria Revenue Service by the third business day of each month.
The new regime will apply uniformly to self-assessment taxpayers, the Nigeria Revenue Service and State and Federal Capital Territory Internal Revenue Services.
The Ministry says interest will be calculated as simple interest on a daily basis, from the tax due date until payment.
It says the new rates will apply to interest arising from October 1, 2026, including interest on taxes that became due before that date.
However, interest that arose before October 1 will not be affected where it was specifically provided for under the rules in force at the time.
The order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices on the subject.
The Ministry further clarified that the new order does not alter the ten per cent penalty for late payment under Section 65 of the Nigeria Tax Administration Act.
Tax authorities also retain the power under Section 66 of the Act to waive penalty or interest where good cause is established.
The Federal Government has urged taxpayers to file their returns and pay applicable taxes on time, while advising those with outstanding liabilities to settle them promptly or engage the relevant tax authority.
