Nigeria Ties Interest on Late Tax Payments to Market Rates From October 1, 2026

Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, has signed an order linking interest on unpaid taxes to prevailing market rates, starting October 1, 2026. The Federal Ministry of Finance announced the move in a statement on Thursday, September 24.

The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, was issued under Section 65 of the Nigeria Tax Administration Act, 2025. It applies to taxes administered by the Nigeria Revenue Service, state internal revenue services and the FCT revenue authority, and covers both self-assessments and assessments.

How the new rates will work

For tax liabilities in naira, the applicable interest rate will be the Central Bank of Nigeria's Monetary Policy Rate plus one percentage point, with a floor based on the yield on 364-day Treasury Bills. The ministry said this is a reduction from the five percentage points previously in effect.

Foreign currency tax obligations will attract interest at the Secured Overnight Financing Rate (SOFR) plus six percentage points. If SOFR is discontinued, an official successor benchmark will take its place.

A single rate will apply for each calendar month, determined by the relevant benchmark on the last business day of the previous month. The Nigeria Revenue Service will publish the applicable rates on its website by the third business day of each month.

Interest will accrue daily on a simple-interest basis from the date the tax falls due until full payment is received.

Penalty still stands

The order does not replace the existing 10% penalty for late payment under the Nigeria Tax Administration Act. Taxpayers who miss their deadlines may therefore face both the penalty and the market-linked interest at the same time.

Tax authorities retain powers under Section 66 of the Act to waive penalties or interest where a taxpayer can demonstrate good cause.

The new rates will apply to interest arising from October 1, including on taxes that became due before that date. Interest that accrued before October 1 will remain subject to the rules in place at the time. The order replaces the 2017 notice on interest on unpaid taxes and all related previous notices.

Why government is doing this

Oyedele said the change is designed to prevent taxpayers from treating delayed payment as a cheap alternative to borrowing from the market.

He 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."

The ministry urged taxpayers with outstanding liabilities to settle them promptly or engage the relevant tax authority, and advised all taxpayers to monitor the monthly rates the Nigeria Revenue Service will publish on its website.