The Federal Government has issued the Nigeria Tax Administration Order 2026, reducing the interest rate charged on late payment of taxes.
The Order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, takes effect on October 1, 2026, according to a statement by the Federal Ministry of Finance in Abuja.
It was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025, which provides for interest on taxes that are not paid when due.
The new framework links the cost of late tax payments more closely to prevailing market rates, providing taxpayers with greater certainty over their liabilities.
According to the ministry, the Order, together with the applicable default penalty, is designed to ensure that delaying tax payments does not become cheaper than obtaining credit from the market.
What the order provides
For taxes payable in naira, interest will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point.
Oyedele said the new rate represents a reduction from the five-percentage-point spread previously applicable. However, the interest rate will not fall below the yield on 364-day Treasury Bills, reflecting the government’s cost of borrowing when tax payments are delayed.
For taxes payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate (SOFR) plus six percentage points. Where SOFR is discontinued, its officially designated successor rate will apply.
The minister said the applicable rate would be determined for each calendar month, with the Nigeria Revenue Service (NRS) required to publish the rates on its website by the third business day of every month.
Explaining the rationale behind the new framework, Oyedele 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 that the framework would also provide greater certainty for taxpayers.
“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,” he said.
Transition and earlier notices
The new rates will apply to interest accruing from October 1, 2026, including interest on tax liabilities that became due before that date.
However, interest that accrued before October 1, 2026, will not be affected to the extent that it is specifically governed by the rules in force at the time.
The Order supersedes the 2017 notice on interest on unpaid taxes, as well as any other earlier notices on the subject.
It does not alter the 10 per cent penalty for late payment prescribed under Section 65 of the Act.
The relevant tax authorities also retain the power under Section 66 of the Act to waive penalties or interest where sufficient cause is established.
Advice to taxpayers
Oyedele urged taxpayers to file their returns and pay applicable taxes on time, while checking the NRS website for the applicable monthly interest rates.
He also advised taxpayers with outstanding liabilities to settle them promptly or engage the relevant tax authority to address their obligations.
