FG Reduces Interest Rate on Late Tax Payments – MSME Africa

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The Federal Government has issued the Nigeria Tax Administration Order 2026, reducing the interest rate charged on late tax payments from October 1, 2026

The Order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025

Under the new framework, interest on tax payable in naira will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point. This represents a reduction from the previous five-percentage-point spread

However, the applicable interest rate will not fall below the yield on 364-day Treasury Bills, reflecting the government’s cost of funding 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 official successor rate will apply

The Nigeria Revenue Service (NRS) has been directed to publish the applicable interest rates on its website by the third business day of every month

According to Oyedele, the new framework is intended to link the cost of late tax payments more closely to prevailing market rates while giving taxpayers greater certainty about their obligations

The Minister said the framework would ensure that delaying tax payments does not become a cheaperment may have to borrow to cover revenue shortfalls caused by delayed tax payments

The new rates will apply to interest arising from October 1, 2026, including interest on tax liabilities that became due before that date. However, interest that arose before October 1 will remain subject to the rules in force at the time

The Order also supersedes the 2017 notice on interest on unpaid taxes and any other previous notices on the subject

The existing 10 per cent penalty for late payment under Section 65 of the Act remains unchanged, while relevant tax authorities retain the power under Section 66 to waive penalties or interest where good cause is established

 

The Federal Government has advised taxpayers to file their returns and pay applicable taxes on time, while those with outstanding liabilities have been encouraged to settle them promptly or engage the relevant tax authority

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