•Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele
The federal government has issued the Nigeria Tax Administration Order 2026 to reduce the interest rate for late payment of tax.
Signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, according to a statement by the Federal Ministry of Finance, Abuja, the Order applies when tax is not paid on time, as provided under section 65 of the Nigeria Tax Administration Act, 2025.
The Order, which takes effect on October 1, 2026, links the cost of late payment more closely to market rates, reports Channels TV.
It gives taxpayers certainty about what late payment costs, and together with the applicable default penalty, it ensures that holding on to tax that is due is not cheaper than borrowing from the market.
What The Order Provides
For tax payable in Naira, interest is charged at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point.
Oyedele explained that this is a reduction from the spread of five percentage points previously applicable, but the rate will not fall below the yield on 364-day Treasury Bills, which reflects what it costs government to fund itself when taxes are paid late.
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.
Oyedele noted that a rate will apply to each calendar month as the Nigeria Revenue Service (NRS) has been directed to publish the applicable rates on its website by the third business day of every month.
Speaking on the Order, the Minister 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: “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.”
Transition And Earlier Notices
The new rates apply to interest arising from 1 October 2026, including interest on tax that became due before that date.
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.
It does not change the 10 per cent penalty for late payment under section 65 of the Act.
Relevant tax authorities also retain their power under section 66 of the Act to waive penalty or interest where good cause is shown.
Advice To Taxpayers
Oyedele advised taxpayers to file their returns and pay applicable taxes on time, and to check the monthly rates on the Nigeria Revenue Service website.
He also encouraged those with outstanding liabilities to settle them promptly or engage the relevant tax authority.
