The Federal Government has introduced a new framework that will reduce the interest charged on late payment of taxes in Nigeria.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, will take effect on October 1, 2026.
The Order was issued under Section 65 of the Nigeria Tax Administration Act, 2025.
New interest rate for naira taxes
Under the new framework, 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 reduction from the previous five-percentage-point spread.
However, the applicable rate cannot fall below the yield on 364-day Nigerian Treasury Bills.
The Nigeria Revenue Service (NRS) will publish the applicable rate for each calendar month by the third business day of that month.
Foreign currency tax payments
For tax liabilities payable in foreign currency, the interest rate will be based on the Secured Overnight Financing Rate (SOFR) plus six percentage points.
If SOFR is discontinued, its official successor rate will be used.
The arrangement is designed to link the cost of late tax payments more closely to prevailing market rates.
10% late-payment penalty remains
The new Order does not remove the existing 10 percent penalty for late payment of tax under Section 65 of the Nigeria Tax Administration Act.
The interest and penalty therefore remain separate charges.
Tax authorities also retain powers under Section 66 of the Act to waive interest or penalties where sufficient cause is established.
New rates begin October 1
The new interest rates will apply to interest arising from October 1, 2026, including interest relating to tax that became due before that date.
However, interest that arose before October 1 will remain governed by the rules applicable at the time, where those rules specifically provided for it.
The new Order also supersedes the 2017 notice on interest on unpaid taxes and other earlier notices dealing with the subject.
Oyedele explains new tax framework
Explaining the policy, Oyedele said late payment of taxes creates a funding gap for government that may have to be covered through borrowing.
He said the new system would connect the cost of late payment to market rates while providing taxpayers with greater certainty about the applicable charges.
The minister urged taxpayers to file their returns and settle their tax liabilities on time.
He also advised taxpayers with outstanding obligations to contact the relevant tax authority or make arrangements to settle their liabilities.
