The federal government says late tax payments will attract new interest rates from October 1, 2026.
According to a statement by the ministry of finance, the new
rates are linked to market interest rates and will be set for each calendar
month.
Under the order, interest on tax payable in naira will be
charged at the Central Bank of Nigeria (CBN’s) monetary policy rate (MPR) plus
one percentage point, compared with the previous five-percentage-point spread.
However, the ministry said the rate would not fall below the
yield on 364-day treasury bills.
This means that since the MPR is 23 percent, taxpayers who
pay late would be charged 24 percent interest on the delayed tax, subject to
the 364-day treasury bill yield floor.
For tax payable in foreign currency, the statement said the
interest rate will be the secured overnight financing rate (SOFR) plus 6
percentage points. The SOFR stands at 22.12 percent for the 30-day average and
22.59 percent for the 90-day average as of September 24, 2026.
The ministry said the new rates would provide taxpayers with
greater certainty over the cost of late payment, which it said has been linked
more closely to prevailing market rates.
Speaking on the move, Taiwo Oyedele, minister of finance and
coordinating minister of the economy, said the new framework would ensure that
delaying tax payments does not become a cheaper source of credit than borrowing
from the market.
“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.
“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.”
‘RATES TO BE PUBLISHED MONTHLY’
The ministry said under the order, one interest rate would
apply for each calendar month and would be determined on the last business day
of the preceding month.
“The Nigeria Revenue Service (NRS) is required to publish
the applicable rate on its website by the third business day of every month,”
the statement added.
The ministry said interest would be calculated as simple
interest on a daily basis, from the date the tax becomes due until payment is
made.
For foreign-currency tax, the ministry said SOFR would apply
as the international benchmark for US dollar rates, noting that if the SOFR is
discontinued, its official successor rate would apply.
Oyedele said the arrangement would also provide a uniform
basis for taxpayers dealing with federal, state and FCT tax authorities.
“Just as important is certainty. Every taxpayer, whether
dealing with the Nigeria Revenue Service or a State revenue service, will know
the rate in advance, see it published every month, and be charged in the same
way,” he said.
“Clear rules make compliance easier and support a fair,
predictable tax system.”
‘10% PENALTY FOR LATE PAYMENT REMAINS’
The ministry said the order does not change the 10 percent
penalty for late payment provided under section 65 of the Nigeria Tax
Administration Act (NTAA), 2025.
“The relevant tax authorities may also waive interest or
penalties where good cause is shown, in line with section 66 of the Act,” it
said.
The ministry said the new rates would apply to interest
arising from October 1, including interest on tax that became due before that
date.
“Interest that arose before October 1 will not be affected
to the extent that it was specifically provided for under the rules in force at
the time,” the statement said.
The finance ministry said the order supersedes the 2017
notice on interest on unpaid taxes and other earlier notices on the subject.
The ministry said the framework applies to self-assessment
taxpayers, the NRS, and state and Federal Capital Territory (FCT) internal
revenue services.
The ministry advised taxpayers to file their returns and pay
applicable taxes on time.
It also advised taxpayers with outstanding liabilities to
settle them promptly or engage the relevant tax authority.
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