Barbara Bako, Abuja.
The Federal Government has introduced a lower interest rate for taxpayers who fail to pay their taxes on time, replacing the previous framework with a new market-based formula that takes effect on October 1, 2026.
The new regulation, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, reduces the interest margin on naira denominated tax liabilities while establishing a uniform method for calculating late payment interest across federal, state and FCT tax authorities.
Under the new order, taxes payable in naira will attract interest at the Central Bank of Nigeria’s Monetary Policy Rate (MPR) plus one percentage point, down from the previous MPR plus five percentage points. However, the rate will not be lower than the yield on the 364-day Treasury Bill.
For taxes payable in foreign currency, interest will be based on the Secured Overnight Financing Rate (SOFR) plus six percentage points.
The government said the revised framework aligns the cost of late tax payments with prevailing market rates while ensuring taxpayers know the applicable rate in advance.
The Nigeria Revenue Service has been directed to publish the monthly interest rate on its website by the third business day of every month.
Oyedele said the reform is designed to prevent late tax payments from becoming a cheaper source of financing than borrowing from the market.
“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,” he said.
He added that the order establishes a uniform and predictable system for taxpayers dealing with both federal and state tax authorities.
The ministry clarified that the new interest rates will apply to interest accruing from October 1, including outstanding tax liabilities from earlier periods, while interest that accrued before that date will remain subject to the rules previously in force.
The order does not alter the statutory 10 per cent penalty for late tax payment, although tax authorities retain the power to waive penalties or interest where taxpayers demonstrate good cause.
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