FG Introduces New Rules for Late Tax Payment Interest

The Federal Government has introduced the Nigeria Tax Administration Order 2026, reducing the interest rate charged on late payment of taxes.

The order was signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, and will take effect from October 1, 2026. It was issued under Section 65 of the Nigeria Tax Administration Act, 2025.

Under the new order, interest on tax payable in naira will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point, replacing the previous five-percentage-point spread.

However, the applicable rate will not fall below the yield on 364-day Treasury Bills, reflecting the government’s cost of borrowing when tax payments are delayed.

For taxes 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 apply.

The Nigeria Revenue Service (NRS) has been directed to publish the applicable rates on its website by the third business day of every month.

Oyedele said the new system is intended to link late-payment costs to prevailing market rates while ensuring that taxpayers have certainty about the financial consequences of delaying tax payments.

The new rates will apply to interest arising from October 1, 2026, including interest on taxes 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 also replaces the 2017 notice on interest on unpaid taxes and other previous notices on the matter.

The government clarified that the new order does not change the 10 per cent penalty for late tax payment under Section 65 of the Act. Tax authorities may also waive penalties or interest where sufficient justification is provided.

The Minister urged taxpayers to file their returns and pay their taxes on time, while advising those with outstanding liabilities to settle them promptly or contact the relevant tax authorities.