Barely one week to Nigeria’s 2026 independence anniversary, the federal government had hinted that sanctions for late payment of tax would commence on the independence anniversary day.
As a result, the Nigerian federal government announced on Thursday that late tax payments will attract new interest rates from October 1, 2026.
According to a statement by the late tax payment of finance, the new rates are linked to market interest rates and will be set for each calendar month.
Under the order, interest on tax payable in naira will be charged at the Central Bank of Nigeria (CBN’s) monetary policy rate (MPR) plus one percentage point, compared with the previous five percentage-point spread.
However, the ministry said the rate would not fall below the yield on 364-day treasury bills.
This means that since the MPR is 23 per cent, taxpayers who pay late would be charged 24 per cent interest on the delayed tax, subject to the 364- day treasury bill yield floor.
For tax payable in foreign currency, the statement said the interest rate will be the secured overnight financing rate (SOFR) plus 6 percentage points. The SOFR stands at 22.12 per cent for the 30-day average and 22.59 per cent for the 90-day average as of September 24, 2026.
The ministry said the new rates would provide taxpayers with greater certainty over the cost of late payment, which it said has been linked more closely to prevailing market rates.
Speaking on the move, Taiwo Oyedele, minister of finance and coordinating minister of the economy, said the new framework would ensure that delaying tax payments does not become a cheaper source of credit than borrowing from the market.
Tax that is due belongs to the public. When it is paid late, the 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
The ministry said under the order, one interest rate would apply for each calendar month and would be determined on the last business day of the preceding month.
“The Nigeria Revenue Service (NRS) is required to publish the applicable rate on its website by the third business day of every month,” the statement added.
The ministry said interest would be calculated as simple interest on a daily basis; from the date the tax becomes due until payment is made.
For foreign-currency tax, the ministry said SOFR would apply as the international benchmark for US dollar rates, noting that if the SOFR is discontinued, its official successor rate would apply.
Oyedele said the arrangement would also provide a uniform basis for taxpayers dealing with federal, state, and FCT tax authorities.
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