FG Slashes Interest Rate for Late Tax Payment, New Order Takes Effect Oct 1
The Federal Government has announced a reduction in the interest rate charged for late payment of tax, in a move aimed at linking the cost of delay to market rates and ensuring uniformity across the country.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, which was issued by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, takes effect from October 1, 2026.
The Order, issued under Section 65 of the Nigeria Tax Administration Act, 2025, sets the interest rate applicable when tax is not paid on time and supersedes the 2017 notice and any other earlier notices on the subject.
Under the new Order, for tax payable in Naira, interest will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point. This is a reduction from the previous spread of five percentage points. However, the rate will not fall below the yield on the 364-day Treasury Bill, which reflects what it costs Government to fund itself when taxes are paid late.
For tax payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate (SOFR), the international benchmark for US dollar rates, plus six percentage points. The Order provides that if SOFR is discontinued, its official successor rate will apply.
The Ministry disclosed that one rate will apply for each calendar month, set on the last business day of the previous month, and the Nigeria Revenue Service (NRS) has been directed to publish the applicable rates on its website by the third business day of every month.
Interest will be calculated as simple interest, calculated daily, from the due date until payment.
According to the release, the new uniform rate applies to self-assessment as well as assessments by the Nigeria Revenue Service and all State and FCT Internal Revenue Services.
Speaking on the Order, the Minister 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. 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 every month, and be charged in the same way. Clear rules make compliance easier and support a fair, predictable tax system.”
The Ministry clarified that the new rates apply to interest arising from October 1, 2026, including interest on tax that became due before that date. Interest that arose before October 1 is not affected to the extent that it is specifically provided for under the rules in force at the time.
It also noted that the Order does not change the 10 per cent penalty for late payment under Section 65 of the Act, and that relevant tax authorities also retain the power under Section 66 to waive penalty or interest where good cause is shown.
Taxpayers have been advised to file their returns and pay applicable taxes on time, and to check the monthly rates on the Nigeria Revenue Service website. Those with outstanding liabilities are advised to settle them promptly or engage the relevant tax authority.
