The Federal Government has introduced a new framework for calculating interest on late payment of taxes, with the Nigeria Tax Administration Order 2026 taking effect from October 1, 2026.
The Order was signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, and announced by the Federal Ministry of Finance on Thursday.
Under the new framework, interest on overdue naira-denominated taxes will be based on the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point.
However, the applicable rate cannot fall below the yield on 364-day Treasury Bills.
For tax liabilities denominated in foreign currencies, interest will be based on the Secured Overnight Financing Rate plus six percentage points.
The Order provides that if SOFR is discontinued, its officially recognised successor will be used.
The Nigeria Revenue Service is expected to publish the applicable interest rates for each calendar month on its website by the third business day of the month.
Oyedele said the new framework was designed to discourage taxpayers from withholding money that is due to 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 said tying late-payment interest to prevailing market rates would ensure that delaying tax payments does not become a cheaper source of credit than borrowing from the market.
Oyedele added that the framework would give taxpayers greater certainty by providing a uniform and publicly available basis for calculating interest.
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 applicable at the time, where provided for under existing regulations.
The 2026 Order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices dealing with the issue.
The government clarified that the Order does not change the 10 per cent penalty for late payment under Section 65 of the Nigeria Tax Administration Act, 2025.
Tax authorities will also retain the 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 settle 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 monthly interest rates.