The Federal Government has announced that interest charges on unpaid taxes will now be tied directly to prevailing borrowing costs, warning that delayed payments force the government to borrow to cover revenue shortfalls.
Under a new framework effective October 1, 2026, interest on naira-denominated tax debts will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point, with a minimum rate linked to the yield on 364-day Treasury Bills.
Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, explaining:
“Tax that is due belongs to the public. When it is paid late, the government may have to borrow to fill the gap, and the cost falls on everyone.
"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 order, issued under Section 65 of the Nigeria Tax Administration Act, 2025, applies uniformly across federal, state, and FCT tax authorities.
For foreign currency tax debts, interest will be charged at the Secured Overnight Financing Rate (SOFR) plus six percentage points.
The Nigeria Revenue Service has been directed to publish applicable monthly rates on its website by the third business day of each month. Interest will accrue daily on a simple-interest basis until payment is made.
Oyedele said the framework provides taxpayers with greater certainty: “Every taxpayer will know the rate in advance, see it published every month, and be charged in the same way. Clear rules make compliance easier and support a fair, predictable tax system.”
The new order supersedes the 2017 notice on interest for unpaid taxes but does not alter the existing 10 percent penalty for late payment. Tax authorities will retain discretion to waive penalties or interest where good cause is shown.
The ministry urged taxpayers to file returns and settle liabilities promptly, stressing that interest accrued before October 1 will remain subject to the old rules.
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