The federal government has cut the interest spread on late payment of taxes from five percentage points above the Central Bank of Nigeria’s Monetary Policy Rate (MPR) to one percentage point, with the new regime taking effect from October 1, 2026.
The change is contained in the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued by Taiwo Oyedele, minister of finance and coordinating minister of the economy.
Under the new order, taxpayers who fail to pay their naira-denominated tax liabilities when due will be charged interest at the CBN’s MPR plus one percentage point.
The ministry, however, said the applicable rate would not fall below the yield on 364-day Treasury Bills, linking the cost of late tax payments to the government’s borrowing costs.
The new framework will apply uniformly to tax authorities at the federal, state and Federal Capital Territory levels.
The ministry said the order was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025, and replaces the 2017 notice on interest on unpaid taxes and other previous notices on the matter.
For tax liabilities payable in foreign currency, the applicable interest rate will be the Secured Overnight Financing Rate (SOFR) plus six percentage points.
Where SOFR is discontinued, the ministry said its official successor rate would be used.
The Nigeria Revenue Service will publish the applicable rate on its website by the third business day of every month, with one rate applying throughout each calendar month.
Interest will be calculated as simple interest on a daily basis, beginning from the date the tax became due until the outstanding liability is paid.
Oyedele said the new system was designed to prevent delayed tax payments from becoming a cheaper source of financing for taxpayers.
“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,” he said.
“This Order ties the cost of late payment to real market rates, so that delaying tax does not become a cheaper form of credit than the market itself.”
The minister also said the publication of rates on a monthly basis would provide taxpayers with greater certainty over their obligations.
The new rates will apply to interest arising from October 1, including interest on tax liabilities that became due before the effective date.
However, the ministry said interest that arose before October 1 would remain subject to the rules that were applicable at the time.
The new order does not alter the 10 per cent penalty for late payment prescribed under Section 65 of the Nigeria Tax Administration Act.
Tax authorities may also waive applicable penalties or interest where good cause is shown, in line with Section 66 of the Act.
The ministry advised taxpayers to file their returns and settle tax liabilities on time, while those with outstanding obligations were encouraged to make payment or engage the relevant tax authority.