Nigeria’s Federal Government has lowered the interest charged on overdue tax payments, replacing a five-percentage-point margin above the Central Bank of Nigeria’s Monetary Policy Rate with a one-point margin, subject to a Treasury Bill floor.
The change takes effect on October 1, 2026, under an Order issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele. It is meant to align late-payment charges more closely with market borrowing costs and to apply one published rate across federal, state and Federal Capital Territory tax authorities.
For taxes due in naira, interest will be the CBN Monetary Policy Rate plus one percentage point. The rate cannot fall below the yield on 364-day Treasury Bills. For taxes payable in foreign currency, interest will be the Secured Overnight Financing Rate (SOFR) plus six percentage points. If SOFR is discontinued, its officially designated successor will apply.
One rate will be fixed for each calendar month, determined on the last business day of the preceding month. The Nigeria Revenue Service must publish the applicable rates on its website by the third business day of the month. Interest will be calculated daily on a simple-interest basis from the due date until the tax is paid.
Oyedele said late tax payment can force government to borrow, and that the cost of that borrowing should not be cheaper than market credit. “This Order ties the cost of late payment to real market rates, so that delay in paying tax does not become a cheaper form of credit than the market itself,” he said.
He also stressed certainty: taxpayers 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.
The new rates apply to interest arising from October 1, 2026, including interest on taxes that became due earlier. Interest that accrued before that date remains subject to the rules then in force, where those rules so provide. The Order replaces a 2017 notice and earlier notices on unpaid-tax interest.
The 10 per cent late-payment penalty under Section 65 of the Nigeria Tax Administration Act, 2025, is unchanged. Tax authorities still have power under Section 66 to waive penalties or interest where good cause is shown.
Taxpayers are advised to file and pay on time, check the monthly rates published by the Nigeria Revenue Service, and settle outstanding liabilities or engage the relevant authority.
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