Abuja – The Federal Government has reduced the interest rate charged on late payment of taxes, with the new regime taking effect from October 1, 2026.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, pursuant to Section 65 of the Nigeria Tax Administration Act, 2025. The Federal Ministry of Finance announced the change in a press statement released in Abuja on Thursday.
Under the new order, interest on tax liabilities payable in naira will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point. This represents a significant reduction from the previous five-percentage-point spread. However, the applicable rate will not fall below the yield on 364-day Treasury Bills, which the government said reflects its cost of funding when taxes are paid late.
For tax liabilities denominated in foreign currency, interest will be calculated at the Secured Overnight Financing Rate (SOFR) — the international benchmark for US dollar-denominated borrowing — plus six percentage points. If SOFR is discontinued, its officially designated successor rate will apply.
The new rates will apply uniformly to taxpayers dealing with the Nigeria Revenue Service, state tax authorities and the Federal Capital Territory Internal Revenue Service. The Nigeria Revenue Service is required to publish the applicable rates on its website by the third business day of every month. Interest will be calculated as simple interest on a daily basis, running from the due date until the tax is fully paid.
The order does not alter the existing 10 per cent penalty for late payment. Tax authorities also retain the power under Section 66 of the Act to waive penalties or interest where good cause is shown. The revised rates will apply to interest accruing from October 1, 2026, including interest on taxes that became due before that date.
Explaining the policy, Oyedele said delayed tax payments impose a financing burden on the public. “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,” the minister stated. He added that the new framework was designed to make the cost of delaying tax payments more predictable and to ensure that taxpayers do not find it cheaper to withhold government revenue than to obtain credit from the market.
The minister urged taxpayers to file returns on time and settle outstanding liabilities promptly, noting that clear rules support a fair and predictable tax system.
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