The Federal Government has reduced the interest charged on late payment of taxes, replacing the previous five-percentage-point margin with a market-linked rate from 1 October 2026.
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, pursuant to 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. However, the applicable rate will not fall below the yield on 364-day Treasury Bills.
For taxes payable in foreign currency, the rate will be the Secured Overnight Financing Rate (SOFR), the benchmark for US dollar interest rates, plus six percentage points. If SOFR is discontinued, its official successor rate will apply.
The Nigeria Revenue Service (NRS) is required to publish the applicable rate on its website by the third business day of every month. Interest will be calculated as simple interest daily, from the date the tax becomes due until payment.
The new regime applies to tax obligations administered by the NRS, State Internal Revenue Services, and the Federal Capital Territory Internal Revenue Service.
Explaining the rationale for the change, Oyedele said: “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.”
He added, “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 monthly, and be charged the same way. Clear rules make compliance easier and support a fair, predictable tax system.”
The order does not, however, abolish the separate 10 percent penalty for late payment under Section 65 of the Act. Tax authorities may also waive interest or penalties where good cause is established under Section 66.
The new rates will apply to interest arising from 1 October, including interest on tax liabilities that became due before that date. Interest accrued before 1 October will remain governed by the rules applicable when it arose.
The order also supersedes the 2017 notice and other earlier notices on interest on unpaid taxes.
The measure comes as the Federal Government continues to implement the four tax laws enacted in 2025, which took effect on 1 January 2026. The government has also commenced a six-week review of the reforms to address implementation gaps, ambiguities and unintended consequences, with recommendations expected to feed into the proposed Finance Bill 2027.
The NRS reported collecting ₦21.6 trillion in the first half of 2026, a 49 percent increase from the corresponding period in 2025, amid the ongoing tax reforms and increased digitalization of revenue administration.
The Finance Ministry advised taxpayers with outstanding liabilities to settle them promptly or engage the relevant tax authority.
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