By Onu Okorie

New order takes effect October 1, replaces 2017 notice
The Federal Government has cut the interest charged on late tax payments, replacing the old fixed formula with one tied to prevailing market rates.
Under the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, interest on overdue naira tax will be set at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point. The previous spread was five percentage points.
The rate cannot fall below the yield on 364-day Treasury Bills. For liabilities in foreign currency, interest will be the Secured Overnight Financing Rate (SOFR) plus six percentage points, or its official successor if SOFR is discontinued.
The Order, made under Section 65 of the Nigeria Tax Administration Act, 2025, takes effect on October 1, 2026. It sets a single framework for the federal, state and Federal Capital Territory tax authorities.
One rate a month
Only one rate will apply in each calendar month. The Nigeria Revenue Service must publish it on its website by the third business day of the month, so taxpayers know the cost of delay in advance.
Mr Oyedele said unpaid tax is public money and that late payment can force government to borrow. “Tax that is due belongs to the public,” he said. The framework is meant to ensure that withholding tax payments is never a cheaper source of financing than a market loan.
He added that every taxpayer, whether dealing with the federal revenue service or a state one, would know the rate in advance and be charged in the same way.
Earlier liabilities covered
The new rates apply to interest arising from October 1, 2026, including on tax that fell due before that date. Interest that arose earlier is unaffected where it is specifically governed by the rules then in force. The Order supersedes the 2017 notice on interest on unpaid taxes and other earlier notices.
Penalty stays
The statutory 10 per cent penalty for late payment under Section 65 of the Act is unchanged. Tax authorities also keep their powers under Section 66 to waive interest or penalties where a taxpayer shows good cause.
What it means
With the MPR at 23 per cent following the CBN’s September 2026 decision, the formula would put the naira rate at 24 per cent, subject to the Treasury Bill floor. That could ease the burden on businesses managing working capital, while the penalty continues to encourage on-time payment.
The floor also means the cost of late payment cannot fall indefinitely if market rates decline.
The Finance Ministry urged taxpayers to file returns and pay on time, and advised those with outstanding liabilities to pay promptly or engage the relevant tax authority.