The Federal Government has announced a reduction in the interest rate charged for late tax payments, aiming to tie the cost of delayed taxes more closely to real market rates.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, which takes effect on October 1, 2026.
The new regulation applies uniformly across federal, state, and Federal Capital Territory (FCT) tax authorities under section 65 of the Nigeria Tax Administration Act, 2025.
Under the updated framework, interest on naira-denominated tax liabilities is set at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, a significant drop from the previous five-percentage-point spread.
However, the rate is structured so it will not fall below the yield on 364-day Treasury Bills, ensuring the government’s cost of funding is covered when taxes are delayed. For foreign currency taxes, interest will be charged at the Secured Overnight Financing Rate (SOFR) plus six percentage points.
Explaining the rationale behind the directive, Minister Oyedele noted that public funds belong to the citizens, and late payments often force the government to borrow to fill budget gaps.
“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,” he stated.
The Order also introduces monthly predictability, requiring the Nigeria Revenue Service to publish the applicable rates on its website by the third business day of each month.
While the late-payment penalty remains fixed at 10 percent, the new guidelines supersede the 2017 notice on unpaid taxes and aim to foster a fairer, more transparent, and predictable tax compliance system.