The Federal Government has ordered taxpayers who fail to meet payment deadlines to pay interest linked to prevailing market rates from October 1, 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 framework, interest on naira-denominated taxes will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, subject to a floor equivalent to the yield on 364 day Treasury Bills. The ministry said this is a reduction from the five percentage points previously applicable.
For foreign currency tax liabilities, taxpayers will pay interest at the Secured Overnight Financing Rate plus six percentage points.
Explaining the rationale, Oyedele said, “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.”
He added, “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.”
One interest rate will apply for each calendar month, based on the applicable benchmark on the last business day of the preceding month. The Nigeria Revenue Service will publish the rates by the third business day of each month, while interest will be calculated daily on a simple-interest basis.
The ministry clarified that the existing 10% late-payment penalty remains in place, meaning defaulters may face both the penalty and market linked interest.
Oyedele said the framework would ensure certainty, adding, “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.”
The new rates will apply to interest arising from October 1, including taxes that became due before then, while interest accrued before October 1 will remain subject to the previous rules.
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