Nigeria has introduced new rules linking late-payment interest on unpaid taxes to prevailing market rates, with the revised rates applying to federal, state, and FCT tax authorities from 1 October 2026.
Nigeria’s Federal Ministry of Finance has introduced new rules for calculating interest on unpaid taxes, linking the cost directly to market rates on 24 September 2026, according to an X post.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, takes effect on 1 October 2026 and applies across federal, state, and FCT tax authorities.
Finance Minister Taiwo Oyedele issued the order under section 65 of the Nigeria Tax Administration Act, 2025. The change connects late payment costs more closely to what the government pays when it borrows due to delayed tax collection.
How the new rates work
For taxes owed in Naira (NGN), the interest rate becomes the Central Bank of Nigeria’s Monetary Policy Rate plus 1 percentage point. However, the rate cannot fall below the yield on 364-day Treasury Bills. This represents a reduction from the previous 5-percentage-point spread.
For taxes owed in foreign currency, the rate is set at the Secured Overnight Financing Rate (SOFR) plus 6 percentage points. If SOFR is discontinued, its official successor rate applies.
The Nigeria Revenue Service calculates interest daily using simple interest from the due date until payment is made. The applicable rate changes once each month, with new figures published by the third business day of every month.
What remains unchanged
The 10% penalty for late payment under section 65 of the Act stays in place. Tax authorities retain the power under section 66 of the Act to waive penalties or interest if a taxpayer shows good cause.
The order affects all interest arising from 1 October 2026 onward, including interest on tax that came due before that date.
Earlier notices from 2017 and other prior guidance are superseded. Interest calculated under the old rules before 1 October is not affected.
