The Federal Government has issued the Nigeria Tax Administration Order 2026, introducing a new framework for calculating interest on late payment of taxes.
The Order, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, applies where tax is not paid within the prescribed time, in line with Section 65 of the Nigeria Tax Administration Act, 2025.
The new Order takes effect from 1 October 2026 and is designed to link the cost of late tax payments more closely to prevailing market rates.
According to the Federal Ministry of Finance, the measure will provide taxpayers with greater certainty about the cost of delayed payments. Combined with the applicable late-payment penalty, it is intended to ensure that retaining tax due to government does not become a cheaper alternative to borrowing from the market.
What the New Order Provides
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 this represents a reduction from the previously applicable five-percentage-point spread. However, the rate will not fall below the yield on 364-day Treasury Bills, reflecting the cost to government of funding itself when taxes are paid late.
For taxes payable in foreign currency, interest will be charged at the Secured Overnight Financing Rate (SOFR) plus six percentage points. Where SOFR is discontinued, its officially designated successor rate will apply.
The Minister explained that the applicable rate will be determined for each calendar month. The Nigeria Revenue Service (NRS) has been directed to publish the relevant rates on its website by the third business day of every month.
Speaking on 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 that the new framework would also provide greater certainty for taxpayers.
“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 1 October 2026, including interest on tax that became due before that date.
However, interest that arose before 1 October 2026 will not be affected where it was specifically provided for under the rules in force at the time.
The new Order supersedes the 2017 notice on interest on unpaid taxes, as well as any other earlier notices covering the same subject.
It does not change the 10 per cent penalty for late payment provided under Section 65 of the Act.
Relevant tax authorities will also retain their power under Section 66 of the Act to waive penalties or interest where good cause is demonstrated.
Advice to Taxpayers
Oyedele advised taxpayers to file their returns and pay applicable taxes on time.
He also urged taxpayers to regularly check the Nigeria Revenue Service website for the applicable monthly interest rates.
Taxpayers with outstanding liabilities were encouraged to settle them promptly or engage the relevant tax authority to address their obligations.
