The Federal Government has announced new interest rates for late tax payments, effective October 1, 2026.
The Ministry of Finance said in a statement that the government will determine the rates monthly based on prevailing market interest rates.
Under the new provision, interest on tax liabilities payable in naira will be calculated using the Central Bank of Nigeria’s (CBN) monetary policy rate (MPR) plus one percentage point, replacing the previous five-percentage-point margin.
However, the ministry said the applicable rate will not fall below the yield on 364-day Treasury bills.
This means taxpayers who pay late could face an interest rate of 24 per cent on outstanding tax liabilities, based on the current 23 per cent MPR, subject to the 364-day Treasury bill yield floor.
The statement specified that the interest rate for taxes payable in foreign currencies will be set at the secured overnight financing rate (SOFR) plus six percentage points. As of September 24, 2026, the 30-day average SOFR stands at 22.12 percent, with the 90-day average at 22.59 percent.
According to the ministry, aligning the revised rates more closely with prevailing market conditions will provide taxpayers with greater clarity regarding late payment costs.
Commenting on the directive, Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, noted that the updated structure ensures delayed tax remittances cannot be utilized as a cheaper alternative to commercial credit.
“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,” Oyedele said.
“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.”
‘Rates to be Published Monthly’
According to the ministry, the directive will apply a single interest rate to each calendar month, with the ministry determining the rate on the final business day of the preceding month.
The ministry said it would calculate interest as simple daily interest from the date a tax becomes due until the taxpayer settles the liability.
It added that the Secured Overnight Financing Rate (SOFR) would serve as the international benchmark for US dollar-denominated tax liabilities. If authorities discontinue SOFR, its officially designated successor rate would replace it.
According to Oyedele, the agreement will also provide taxpayers dealing with federal, state and FCT tax authorities with a consistent basis for tax-related transactions.
He said, “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.”
10% penalty for late tax payments stands
The government clarified that the statutory 10 percent late payment penalty outlined in Section 65 of the Nigeria Tax Administration Act (NTAA), 2025 remains unaffected by the directive.
The updated rates will apply to interest accruing from October 1st onward, including interest on tax liabilities that fell due prior to that date.
“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 statement said.
The ministry stated that the new framework governs self-assessment taxpayers, the NRS, and internal revenue services across the states and the Federal Capital Territory (FCT).
Taxpayers were urged to submit their returns and settle all applicable tax obligations promptly.
Additionally, the ministry advised individuals with outstanding liabilities to clear their debts immediately or engage the relevant tax authority to resolve their accounts.
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