FG reduces late tax interest rates from Oct 1, links cost to market rates
The Federal Government has issued the Nigeria Tax Administration Order 2026, signed by Finance Minister Taiwo Oyedele, which reduces interest rates for late tax payments effective October 1, 2026. For taxes payable in Naira, interest will be charged at the Central Bank of Nigeria's Monetary Policy Rate plus one percentage point—but not falling below the yield on 364-day Treasury Bills—as a reduction from the previous spread of five percentage points. For foreign currency taxes, interest will be charged at the Secured Overnight Financing Rate (SOFR) plus six percentage points, with SOFR's successor rate to apply if discontinued.
The Order takes effect October 1, 2026, and applies to interest arising from that date, including interest on tax that became due before then. Interest accrued before October 1 will not be affected under previous rules. The Nigeria Revenue Service (NRS) has been directed to publish applicable monthly rates on its website by the third business day of each month, providing taxpayers with advance certainty.
Minister Oyedele explained the change ties late payment costs to real market rates, ensuring that holding onto due tax is not cheaper than borrowing from the market. He emphasized that while interest rates change, the 10 percent penalty for late payment under section 65 of the Nigeria Tax Administration Act remains unchanged, and tax authorities retain power to waive penalties or interest where good cause is shown. Taxpayers are advised to file returns and pay applicable taxes on time, check monthly rates on the NRS website, and promptly settle outstanding liabilities or engage relevant tax authorities.