By Oluwakemi Kindness
The Federal Government has reduced the interest charged on late payment of taxes in naira from five percentage points above the Central Bank of Nigeria’s Monetary Policy Rate to one percentage point.
The new rate takes effect from October 1, 2026, according to a statement on Thursday by the ministry.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, under Section 65 of the Nigeria Tax Administration Act, 2025.
Under the new order, taxpayers who pay in naira will be charged interest at the MPR plus one percentage point.
However, the interest rate cannot fall below the yield on 364-day Treasury Bills.
For taxes payable in foreign currency, the Federal Ministry of Finance said taxpayers will pay interest at the Secured Overnight Financing Rate, SOFR, plus six percentage points.
The ministry said the new framework will link the cost of late tax payments more closely to prevailing market rates and give taxpayers greater certainty.
The Nigeria Revenue Service will publish the applicable rate on its website by the third business day of every month.
The ministry said the rate will apply for each calendar month and interest will be calculated daily as simple interest from the tax due date until payment.
The new rates will apply to interest arising from October 1, 2026, including interest on tax that became due before that date.
However, interest that arose before October 1 will remain subject to the rules that were in force at the time.
The order does not change the 10 per cent penalty for late payment under Section 65 of the Act.
Oyedele said the new system would prevent late payment of taxes from becoming a cheaper source of credit than borrowing from the market.
He also said the monthly publication of the rates would make the system more predictable for taxpayers dealing with federal, state and FCT tax authorities.
The order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices on the subject.
