The Federal Government has issued the Nigeria Tax Administration Order 2026, reducing the interest rate payable by taxpayers who fail to settle their tax liabilities on time.
Gatekeepers News reports that the order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, takes effect from October 1, 2026.
According to a statement by the Federal Ministry of Finance, the order applies to late tax payments under Section 65 of the Nigeria Tax Administration Act, 2025.
The new framework links the cost of late tax payments more closely to prevailing market rates, providing taxpayers with greater certainty over the financial implications of delaying payment.
For taxes payable in naira, interest will be charged at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point.
Oyedele said the new rate represents a reduction from the five-percentage-point spread previously applicable. However, the interest rate will not fall below the yield on 364-day Treasury Bills, reflecting the government’s cost of borrowing when tax payments are delayed.
For tax liabilities payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate (SOFR), an international benchmark for US dollar interest rates, plus six percentage points.
Where SOFR is discontinued, its official successor rate will apply.
The minister said the applicable rate would be determined for each calendar month, with the Nigeria Revenue Service (NRS) required to publish the rates on its website by the third business day of every month.
Explaining the rationale behind the new order, Oyedele 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.”
He added: “Just as important is certainty. Every taxpayer, whether dealing with the Nigeria Revenue Service or a State revenue service, will know the rate in advance, see it published every month, and be charged in the same way. Clear rules make compliance easier and support a fair, predictable tax system.”
Transition and Earlier Notices
The new rates will apply to interest arising from October 1, 2026, including interest on taxes that became due before that date.
However, interest that arose before October 1 will not be affected to the extent that it was specifically provided for under the rules in force at the time.
The 2026 order supersedes the 2017 notice on interest on unpaid taxes and any other earlier notices on the matter.
The order does not alter the 10 per cent penalty for late payment provided under Section 65 of the Nigeria Tax Administration Act.
Tax authorities also retain the power under Section 66 of the Act to waive penalties or interest where good cause is established.
Oyedele urged taxpayers to file their returns and pay their applicable taxes on time, while advising them to check the NRS website for the applicable monthly interest rates.
He also encouraged taxpayers with outstanding liabilities to settle them promptly or engage the relevant tax authority to address their obligations.
