Nigerians and businesses that delay their tax payments from October 1 will face a new interest regime tied directly to the Central Bank of Nigeria’s benchmark interest rate.
The new rule will take effect from October 1, 2026, following an order issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, under the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026.
The order was made pursuant to Section 65 of the Nigeria Tax Administration Act, 2025.
Under the new framework, interest on overdue naira-denominated taxes will be calculated at the CBN’s Monetary Policy Rate plus one percentage point.
The previous system, which applied a fixed five-percentage-point margin to the benchmark rate, has been discontinued.
However, the new interest rate cannot fall below the yield on 364-day Federal Government Treasury Bills.
The applicable rate will be reviewed monthly and published by the Nigeria Revenue Service by the third business day of each month.
The CBN’s current Monetary Policy Rate is 26.5 per cent, which means the applicable rate would be 27.5 per cent if the rate remains unchanged when the new regime takes effect.
Interest on unpaid taxes will accrue from the date the payment becomes due until the outstanding liability is settled. It will be calculated daily on a simple-interest basis.
For example, at an annual interest rate of 27.5 per cent, a taxpayer owing ₦1 million for 30 days would incur approximately ₦22,603 in interest, excluding any applicable penalty.
The new order does not remove the 10 per cent penalty for late payment provided under Section 65 of the Nigeria Tax Administration Act.
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Oyedele said the interest charge was intended to reflect the cost incurred by government when tax payments are delayed.
“If tax is due and paid late, government may have to borrow to fill the gap, and the cost falls on everyone,” he said.
The new framework will apply to the Nigeria Revenue Service, State Internal Revenue Services and the FCT tax authority.
The order also provides for interest arising from October 1, including interest on certain tax liabilities that became due before that date. However, interest that accrued before October 1 will continue to be governed by the previous rules.
For taxes payable in foreign currency, the applicable interest rate will be the Secured Overnight Financing Rate plus six percentage points.
The SOFR is a benchmark interest rate reflecting the cost of borrowing US dollars in financial markets.
The government said the monthly publication of the applicable rate would provide taxpayers with a clearer basis for determining the cost of delayed tax payments.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
