The Federal Government has reduced the interest rate charged on late payment of taxes through the Nigeria Tax Administration Order 2026, which takes effect on October 1, 2026.
The Order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, applies to taxes that are not paid by the due date under Section 65 of the Nigeria Tax Administration Act, 2025.
According to a statement by the Federal Ministry of Finance, the new rules link the cost of late tax payments more closely to prevailing market rates while providing taxpayers with greater certainty over the interest payable.
For taxes payable in naira, interest will be charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point.
Oyedele said this represents a reduction from the previous five-percentage-point spread. However, the applicable rate will not fall below the yield on 364-day Treasury Bills.
For taxes payable in foreign currency, the interest rate will be based on the Secured Overnight Financing Rate (SOFR), the benchmark for US dollar-denominated rates, plus six percentage points. If SOFR is discontinued, its official successor rate will apply.
The Minister said the Nigeria Revenue Service (NRS) would publish the applicable rates on its website by the third business day of every month.
“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.
He added that linking the cost of late payment to market rates would ensure that delaying tax payments does not become a cheaper source of credit than borrowing from the market.
The new rates will apply to interest arising from October 1, 2026, including interest on tax liabilities that became due before that date. However, interest that arose before October 1 will remain governed by the rules applicable at the time.
The Order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices on the subject.
It does not, however, alter the 10 per cent penalty for late payment provided under Section 65 of the Nigeria Tax Administration Act.
Tax authorities also retain the power under Section 66 of the Act to waive penalties or interest where good cause is established.
Oyedele advised taxpayers to file their returns and pay applicable taxes on time, while encouraging those with outstanding liabilities to settle them promptly or engage the relevant tax authority.