BY CHIKA OKEKE, Abuja
Ahead of the October deadline, the Federal Government has slashed the interest rate for late payment of tax, advising taxpayers to offset outstanding liabilities promptly or engage the relevant tax authority.
Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele on Thursday in Abuja, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026.
Referencing section 65 of the Nigeria Tax Administration Act, 2025, the Order fixed interest rate on late payment of tax, effective October 1, 2026, linking the cost of late payment more closely to market rates.
The Order addressed taxpayers’ certainty about the cost of late payment with applicable default penalty, ensuring that intentionally negating early payment of taxation is not cheaper than borrowing from the market.
Oyedele said: “For tax payable in Naira, interest is charged at the Central Bank of Nigeria’s, CBNs, Monetary Policy Rate, MPR, plus one percentage point.”
This signified a reduction from the spread of five percentage points previously applicable, though the rate will not fall below the yield on 364-day Treasury Bills, reflecting what it costs the government to fund itself when taxes are paid late.
But for tax payable in foreign currency, interest is charged at the Secured Overnight Financing Rate, SOFR, the international benchmark for US dollar rates, plus six percentage points. If SOFR is discontinued, its official successor rate will apply.
The Minister added: “One rate will apply for each calendar month but the Nigeria Revenue Service, NRS, has been directed to publish the applicable rates on its website by the third business day of every month.
“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.”
“Every taxpayer, whether dealing with the NRS 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 and predictable tax system.”
The Minister assured that the new rates applied to interest arising from 1 October 2026, including interest on tax that became due before the deadline.
Oyedele said: “Interest that arose before 1 October 2026 is not affected to the extent that it is specifically provided for under the rules in force at the time. The Order supersedes the 2017 notice on interest on unpaid taxes and any other earlier notices on the subject.
He pointed out that the Order did not alter the 10 per cent penalty for late payment under section 65 of the Act, adding that relevant tax authorities also retained their power under section 66 of the Act to waive penalty or interest ‘where good cause is shown.’
The Minister encouraged taxpayers to file their returns and pay applicable taxes on time, while constantly checking the monthly rates on the NRS website.
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