The Federal Government has introduced a new tax administration order that will reduce the interest charged on taxpayers who fail to pay their taxes by the due date.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, will take effect from October 1, 2026. The order was issued under Section 65 of the Nigeria Tax Administration Act, 2025.
Under the new framework, interest on tax liabilities payable in naira will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point. This replaces the previous five-percentage-point spread.
However, the applicable rate will not fall below the yield on 364-day Nigerian Treasury Bills.
For tax liabilities payable in foreign currency, the interest rate will be based on the Secured Overnight Financing Rate (SOFR) plus six percentage points.
The new system will also introduce a monthly interest rate. The Nigeria Revenue Service (NRS) is expected to publish the applicable rate on its website by the third business day of every month.
Interest will be calculated as simple interest on a daily basis, beginning from the date the tax becomes due until the outstanding liability is fully paid.
The new regime applies to self-assessment arrangements as well as tax assessments administered by the NRS, State Internal Revenue Services and the Federal Capital Territory Internal Revenue Service.
The government clarified that the new order does not remove the 10 per cent late-payment penalty provided under Section 65 of the Nigeria Tax Administration Act. Tax authorities may also waive interest or penalties where good cause is established, in line with Section 66 of the Act.
The Federal Government said the new framework is intended to make the cost of late tax payments more predictable while linking it more closely to prevailing market rates.
Taxpayers with outstanding liabilities have been advised to settle their obligations promptly, while taxpayers generally are encouraged to file their returns and pay applicable taxes within the prescribed deadlines.
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