The Federal Government of Nigeria has announced a new order that will link interest on late tax payments to prevailing market rates, effective from October 1, 2026. This initiative, introduced by Finance Minister Taiwo Oyedele, aims to enhance compliance and mitigate the financial burden on the public.
The Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, establishes a framework where interest for naira-denominated taxes will be calculated at the Central Bank of Nigeria’s Monetary Policy Rate plus one percentage point, while foreign currency tax liabilities will incur interest at the Secured Overnight Financing Rate plus six percentage points.
Under this new system, interest rates will be updated monthly based on market benchmarks, providing transparency and predictability for taxpayers. The Nigeria Revenue Service is tasked with publishing these rates, ensuring that all taxpayers are aware of their obligations in advance.
Despite the new framework, a 10% penalty for late payments remains in effect. Taxpayers are encouraged to settle outstanding liabilities promptly to avoid incurring both penalties and market-linked interest. This order supersedes previous regulations and aligns with the government's broader tax reform initiatives aimed at modernizing Nigeria's revenue collection.