Precious Nwonu, Enugu
The Federal Government has introduced a new tax administration order that will reduce the interest charged on late payment of taxes from October 1, 2026.
The Nigeria Tax Administration Order 2026 was signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, according to a statement by the Federal Ministry of Finance.
The order was issued pursuant to Section 65 of the Nigeria Tax Administration Act, 2025, which provides for interest on tax liabilities that remain unpaid after the due date.
Under the new framework, the interest rate for taxes payable in naira will be linked to the Central Bank of Nigeria’s Monetary Policy Rate, with an additional one percentage point.
Oyedele explained that the new rate represents a reduction from the previous five-percentage-point spread.
However, the applicable interest rate will not fall below the yield on 364-day Nigerian Treasury Bills, reflecting the government’s cost of borrowing when tax payments are delayed.
For tax liabilities denominated in foreign currencies, the order sets the interest rate at the Secured Overnight Financing Rate, a benchmark for US dollar borrowing, plus six percentage points.
The order further provides that if SOFR is discontinued, its officially recognised successor rate will be used.
The Nigeria Revenue Service has been directed to publish the applicable interest rates on its website by the third business day of every month.
The minister said the new system would give taxpayers greater certainty about the financial consequences of delaying tax payments while ensuring that late payment does not become a cheaper source of financing than borrowing from the market.
Oyedele said the reform was also designed to promote fairness and predictability in tax administration by ensuring that taxpayers know the applicable rates in advance.
The new rates will apply to interest accruing from October 1, 2026, including interest on tax liabilities that became due before that date.
However, interest that accrued before October 1 will remain subject to the rules applicable at the time, where specifically provided for under the previous regime.
The 2026 order replaces the 2017 notice on interest charged on unpaid taxes, as well as other earlier notices dealing with the same subject.
The reform does not alter the 10 per cent penalty for late payment prescribed under Section 65 of the Nigeria Tax Administration Act.
Tax authorities will also retain the power under Section 66 of the Act to waive penalties or interest where sufficient grounds are established.
Oyedele urged taxpayers to file their returns and settle their tax obligations on time, while advising those with outstanding liabilities to make payments promptly or engage the relevant tax authority to address their obligations.
The minister also encouraged taxpayers to regularly check the Nigeria Revenue Service website for the monthly applicable interest rates.