By Ambrose Amos
The Federal Government has introduced a new framework for calculating interest on late payment of taxes, with the Nigeria Tax Administration Order 2026 set to take effect from October 1, 2026.
The Order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, was announced by the Federal Ministry of Finance on Thursday.
It provides that interest on overdue taxes will be tied more closely to prevailing market rates, replacing the previous five-percentage-point spread applicable to late tax payments.
Under the new framework, taxpayers owing taxes in naira will be charged interest at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point.
However, the applicable rate will not be lower than the yield on 364-day Treasury Bills, reflecting the Federal Government’s cost of borrowing when tax revenues are delayed.
For tax liabilities denominated in foreign currency, the interest rate will be based on the Secured Overnight Financing Rate, the benchmark for US dollar-denominated borrowing, plus six percentage points.
The Order also provides that where SOFR is discontinued, its officially recognised successor rate will be used.
According to the government, the Nigeria Revenue Service will publish the applicable interest rates for each calendar month on its website by the third business day of the month.
Oyedele said the new arrangement was designed to prevent taxpayers from benefiting financially by withholding taxes that are already due to the government.
“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,” the minister said.
He added that linking the cost of late payment to market rates would ensure that delaying tax payments does not become a cheaper source of credit than borrowing from the market.
Oyedele also stressed that the Order was intended to provide greater certainty for taxpayers by establishing a uniform and publicly available basis for calculating interest.
“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,” he said.
The new rates will apply to interest arising from October 1, 2026, including interest on taxes that became due before that date.
However, interest that accrued before October 1 will remain subject to the rules that were applicable at the time, where specifically provided for under the existing regulations.
Bola Tinubu; Taiwo Oyedele
Bola Tinubu; Taiwo Oyedele
The 2026 Order supersedes the 2017 notice on interest on unpaid taxes as well as other earlier notices dealing with the issue.
The government clarified that the Order does not alter the 10 per cent penalty imposed for late payment under Section 65 of the Nigeria Tax Administration Act, 2025.
Tax authorities will also retain their power under Section 66 of the Act to waive penalties or interest where sufficient cause is established.
Oyedele urged taxpayers to file their returns and pay their tax liabilities promptly to avoid additional costs.
He also advised taxpayers with outstanding liabilities to settle them or engage the relevant tax authority, while urging them to monitor the Nigeria Revenue Service website for the applicable monthly interest rates.
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