The Federal Government has reduced the interest charged on overdue tax payments, cutting the spread applied to naira-denominated tax liabilities from five percentage points above the Central Bank of Nigeria’s Monetary Policy Rate (MPR) to one percentage point.
Under the new formula, a ₦1 million tax bill that remains unpaid for 90 days would attract about ₦59,178 in interest if the applicable annual rate is 24%. This is based on the CBN’s current 23% MPR plus one percentage point. Under the previous five-percentage-point spread, using the same 23% MPR, the annual rate would be 28% and the interest for 90 days would be about ₦69,041, representing a difference of roughly ₦9,863.
The separate 10% late-payment penalty remains in place.
The change is contained in the Nigeria Tax Administration (Interest on Late Payment of Tax) Order, 2026, issued by Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele under Section 65 of the Nigeria Tax Administration Act, 2025. The Federal Ministry of Finance announced the Order on September 24, 2026, saying it would take effect from October 1, 2026.
The Central Bank of Nigeria had reduced the MPR by 350 basis points from 26.5% to 23% at its Monetary Policy Committee meeting on September 21-22, 2026. The CBN said the MPR was reset to 23% at its 307th MPC meeting.
The new tax order provides that interest on tax payable in naira will be charged at the MPR plus one percentage point. However, the applicable rate cannot fall below the yield on 364-day Treasury Bills, linking the minimum charge to the government’s own borrowing cost, according to the Finance Ministry’s September 24 statement.
For tax liabilities payable in foreign currency, the interest rate will be based on the Secured Overnight Financing Rate, or SOFR, plus six percentage points. If SOFR is discontinued, its officially designated successor rate will apply.
The Order also introduces a monthly rate-setting system. One rate will apply throughout each calendar month, based on the applicable benchmark on the last business day of the preceding month. The Nigeria Revenue Service is required to publish the applicable rate on its website by the third business day of each month, while interest will be calculated as simple interest daily from the date the tax becomes due until payment is made.
The new rates will apply to interest arising from October 1, 2026, including interest on tax liabilities that became due before that date. However, interest that accrued before October 1 will remain governed by the rules that applied when it arose. The Order also supersedes the 2017 notice and other earlier notices on interest on unpaid taxes.
The 10% penalty for late payment under Section 65 of the Nigeria Tax Administration Act remains unchanged. Tax authorities also retain powers under Section 66 to waive penalties or interest where good cause is established.
Oyedele said the new framework was intended to link the cost of delayed tax payments to market rates, arguing that government may have to borrow when taxes are not paid on time. He said the arrangement would also give taxpayers greater certainty because the applicable monthly rates would be published in advance.
