The Federal Government has introduced market-linked interest charges for taxpayers who fail to pay their taxes by the stipulated deadlines, with the new rates taking effect from October 1, 2026.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, pursuant to Section 65 of the Nigeria Tax Administration Act, 2025.
Under the new framework, interest on naira-denominated tax liabilities will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, subject to a floor equivalent to the yield on 364-day Treasury Bills.
The Ministry of Finance said the new formula represents a reduction from the previous five-percentage-point margin.
For tax liabilities denominated in foreign currencies, taxpayers will pay interest based on the Secured Overnight Financing Rate (SOFR) plus six percentage points.
Explaining the policy, Oyedele said late payment of taxes could force the government to borrow to cover funding gaps, thereby increasing the cost to the public.
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He said linking the interest rate to prevailing market benchmarks would ensure that delaying tax payments would not become a cheaper alternative to obtaining credit from the market.
The framework provides for a single interest rate for each calendar month, based on the applicable benchmark on the last business day of the preceding month. The Nigeria Revenue Service will publish the rates by the third business day of every month.
Interest will be calculated daily using a simple-interest method.
The ministry clarified that the existing 10 per cent late-payment penalty remains in force. This means taxpayers who default may be required to pay both the penalty and the market-linked interest.
Oyedele said the new framework would provide greater certainty for taxpayers, noting that the applicable rates would be published monthly and applied uniformly to taxpayers dealing with both federal and state revenue authorities.
The new rates will apply to interest accruing from October 1, 2026, including taxes that became due before that date. However, interest accrued before October 1 will continue to be governed by the previous rules.
