Nigerian taxpayers who pay their taxes late will now be charged interest tied directly to prevailing market benchmarks rather than a fixed markup, under a new order signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, that takes effect from October 1, 2026.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued under section 65 of the Nigeria Tax Administration Act, 2025, will apply uniformly across the Nigeria Revenue Service and all state and FCT internal revenue services.
Under the new framework, interest on naira-denominated tax liabilities will be charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, a sharp reduction from the previous five-point spread, though the rate cannot fall below the yield on 364-day Treasury Bills.
For tax payable in foreign currency, interest will be pegged to the Secured Overnight Financing Rate (SOFR) plus six percentage points, with an official successor rate to apply should SOFR be discontinued.
The applicable rate will be reset monthly, based on figures as of the last business day of the preceding month, and published by the Nigeria Revenue Service by the third business day of each new month. Interest will continue to be calculated daily on a simple-interest basis, running from the original due date until the tax is paid.
Explaining the rationale, Oyedele said the Order is meant to ensure that delaying tax payments is never cheaper than borrowing on the open market. “Tax that is due belongs to the public,” he said. “When it is paid late, 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.”
He said predictability was equally important to the reform. “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, adding that uniform, transparent rules would make compliance easier and support a fairer tax system.
The Order does not alter the existing 10 per cent penalty for late payment prescribed under section 65 of the Act, and tax authorities retain their discretion under section 66 to waive interest or penalties where good cause is shown.
It supersedes a 2017 notice on interest for unpaid taxes and all earlier notices on the subject, though interest that accrued before October 1, 2026 will continue to be governed by the rules in force at the time.
The Ministry advised taxpayers to file returns and settle liabilities on time, monitor the monthly published rates on the Nigeria Revenue Service website, and reach out to the relevant tax authority to resolve any outstanding balances.
